20 October 2004 The amount spent on offshore outsourcing will more than double over the next four years reports analyst company IDC, with global spending hitting $17 billion by 2008.

According to IDC, businesses will initially look to outsource IT services to locations in India, the Philippines and China; offshoring to central and Eastern Europe is set to gain in popularity from 2006 onwards.

IDC predicts that global spending on offshore outsourcing will rise from $7 billion in 2004 to $17 billion in 2008.

Spending by US and European customers on offshore IT services will continue to be heavily concentrated on applications, with the most activity being in the custom application development, application management, and systems integration areas.

But the market is also moving into areas which have traditionally been delivered locally, according to David Tapper, research director of IDC’s Outsourcing, Utility and Offshore Services. “These services range from application and infrastructure management to IT consulting,” he said.

CIOs will look at offshore outsourcing to form an increasing part of their overall IT services spend, he added.

“Due to the persistent need for customers to reduce costs coupled with the proven capabilities of offshore players, IDC believes there exists considerable market opportunities for these players in the onshore markets, as well as local players looking to leverage offshore as part of their service delivery capabilities,” Tapper said.