The Outsourcing of Information Technology Jobs - Research Paper Example

This paper discusses various aspects of IT outsourcing phenomenon and the reasons as to why firms outsource. According to reports by Gartner, the worldwide IT services outsourcing market is currently worth about 50 billion USD with the ITES and BPO market being worth about 130 billion USD (Pettey, 2009). The economic recession has had a downward pressure on the outsourcing market. In 2008, India with its leading companies such as Accenture, Infosys, Wipro, TCS and many other had a 63% market share of the IT outsourcing market.

This is a decrease from the 70% market share it enjoyed in 2007 when India was the preferred destination and now other countries such as Eastern European regions, China, Taiwan and South Africa have entered the market. This is a reduction from the 2004 figures that placed the IT outsourcing market at 163 billion USD (McCue, 2005). Clearly, the market has been worsted by the economic recession, failure of large banks and insurance companies, failure of large automobile manufacturers and many other firms.

Outsourcing has been around since a few decades and the best examples were outsourcing of food and catering business, janitorial services, housekeeping work and so on. This was actually also called as ‘in sourcing’ since outside companies and vendors came to work inside a firm. The outsourcing and in sourcing phenomenon has been regarded as one of the forces that flattened the world. Among the 10 flattening forces, Friedman has listed five forces that can be regarded as leading to outsourcing.

The forces are: 4th force Open-Sourcing; 5th force Outsourcing; 6th force Offshoring; 7th force Supply-Chaining and 8th force Insourcing (Friedman, 2005). The world firs realized the benefits of outsourcing when Kodak outsourced its whole IT department to IBM for 6 billion USD. Up till then, IT outsourcing was only done for data entry work, electronic transcription of hard