Report Says Overseas Outsourcing Will Keep GrowingReport Says Overseas Outsourcing Will Keep Growing

A new research report indicates that the push by major companies to lower IT costs by moving key operations to developing countries such as India will continue to gather steam this year.

The report, issued Wednesday by Giga Information Group, says outsourcing to India will grow by 25% this year because of what Giga calls the "incomparable quality and cost benefits" offered by the country.

The research is the latest sign that India is coming to dominate the IT services market. A recent Gartner survey found that 70% of businesses with more than $1 million earmarked for offshore outsourcing will do so in India. Bank of America Corp., for instance, has said it will outsource up to 1,100 jobs to Indian service providers this year.

Almost every major outsourcing deal struck this year between businesses and service providers such as IBM Global Services and EDS will involve an offshore component, Giga's report says. It also predicts that China could eventually rival India as an outsourcing center because of its "immense, inexpensive labor pool." The consulting group cautions, however, that the communist nation is not yet a viable outsourcing location for North American companies because of the lack of widespread English-language skills among workers and a poor record of protecting intellectual property.