Mr. Marc Hebert, EVP, Sierra Atlantic, USA addressed the students of the ISB on the current scenario of offshoring in general and IT offshoring in particular. Mr. Hebert has been with Sierra Atlantic since 1999. Previously, he was with Oracle Corporation as Vice President, Enterprise Platforms Division and also as the first Chief Information Officer. Prior to Oracle, he had spent 11 years with Anderson Consulting, managing large implementation projects for health care providers. He is also a board member of several non-profit organizations.

Mr. Hebert received a Bachelor of Science degree in Experimental Psychology from Harvard University and an MBA from Stanford University.

Mr. Hebert’s long association with the IT sector has helped in developing rare insights into trends in that sector, particularly with regard to offshoring. Mr Hebert shared these insights with the ISB and TiE – Hyderabad community on October 25, 2005. Here is a brief write-up on this interesting and informative session.

Mr. Hebert called offshoring a pointer towards economic liberty. It demonstrates the power of utilising cost effective and quality services, sourced from places best suited to provide such services, in creating economic value. A study has found that one US Dollar spent on IT offshoring creates $ 1.46 in value for the firm. India has been a major beneficiary of this trend towards IT offshoring because of the availability of skilled manpower, and a favourable business environment. The value of IT services offshored from the US is expected to be about $ 31 million in 2008. India, with a present share of 80% of US offshoring contracts, will greatly benefit from this growth in the business.

Here are some trends that can be observed in offshoring in general and IT offshoring in particular.

• Global demographics will compound offshoring
  
  Over the next three to four decades, many countries in the developed world will see both a decline in population and a decline in the workforce. This demographic trend suggests that offshoring as an activity will only grow.

• As globalisation grows, offshoring gets greyer
  
  Sierra Atlantic - the company Marc works with provides offshore software development services to a Silicon Valley based company with most of its clients in South America. Such trends make categorisation of companies in the chain delivering services to the end customer a major challenge.

• It is amazing what can be offshored

  Back Office

  Customer Contact

  Corporate Functions

  Knowledge Services

  Research & Development

  From back office functions to high-end Research and Development, a range of services can be offshored.
   

• India and China graduate four times the number of engineers that US graduates
  
  The availability of this pool of talent will attract offshoring business that can be leveraged to create economic value. 

• US is heading towards another IT skills shortage
  
  The next few years will see the creation of 0.5 million new IT jobs in the US and there are not enough trained personnel available to hire. This skill shortage would further fuel offshoring. 

• India is not getting more expensive
  
  Despite 15 to 20% increases in the wage bill annually, India’s IT sector is still able to compete on cost because of such factors as addition of manpower at entry level at very reasonable salaries, upgrades in infrastructure, attaining economies of scale, and ramp-up of skills.