UK companies will double offshore IT services staff numbers by 2008, according to analyst Ovum.

Offshore headcount is set to rise to 130,000 over the next three years, in contrast to declining onshore staff numbers, which Ovum predicts will fall by six per cent over the same period.

‘Cost is the major factor driving IT services offshore,’ said the report’s author, senior Ovum analyst Phil Codling. ‘On average companies can make a 60 per cent saving offshore.’

‘Wage inflation in offshore locations has become an issue as the model becomes more common, but the differential remains very attractive,’ said Codling.

He believes the loss of jobs in the UK will be gradual and less dramatic than has been widely predicted, and that most UK job losses will be in programming, low-level technical roles, call centre, helpdesk and back-office administration.

‘India is, by far, the leading offshore location because it offers the broadest range and unmatched volume of skills,’ he said.

Codling predicts that companies will make an offshoring push into other Asian locations, following firms such as LogicaCMG, which last week said it is to expand IT operations to the Philippines.

While some companies are bringing back customer service activities from offshore, Codling says this is mainly limited to customer-facing operations.

‘In the IT market the flow is still very much in one direction – towards offshore locations,’ he said.

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Further reading:

Lloyds TSB outsources HR systems to India

5,000 UK IT jobs per year to go offshore