Offshore Outsourcing Revenue Soaring At 20%-A-Year PaceOffshore Outsourcing Revenue Soaring At 20%-A-Year Pace

Money spent on offshore IT services will continue to enjoy double-digit gains during the next several years as businesses look for ways to cut technology costs.

The worldwide market for offshore IT services will grow to $17 billion in 2008 from $7 billion in 2003, achieving a compound annual growth rate of 20%, according to a study released Monday by market researcher IDC. The study only tracks IT services sales won by offshore-based companies such as India's Wipro Technologies and Infosys Technologies. It does not include the value of work being placed offshore by American service providers such as IBM and EDS.

The growth is being driven in part by the fact that some IT-related work that has been relatively immune to offshoring is starting to move overseas, says Barry Mason, a senior analyst at IDC. "We're starting to see offshore firms move up the value chain," Mason says. IT consulting, Mason says, represents one new market that offshore firms are aggressively pursuing.

The good news for American IT workers: As offshore companies expand, they're opening offices in the United States and hiring locally. Says Mason: "There is still a lot of work that requires a presence close to the client."