Bangalore: Global Information Technology (IT) research firm International Data Corporation (IDC) today (Nov 3) said nearly 12 per cent of the IT outsourcing done by American firms would be offshore driven in the next five years.

"Application programmes of about 30 per cent to 50 per cent would go offshore in the next five years. And nearly 12 per cent of the IT outsourcing by US firms would be offshore driven," IDC US Group vice president services Traci Gere told industry leaders at a conference on "New Outsourcing Opportunities" at the ongoing BangaloreIT.COM 2003.

Stating that worldwide business services spending was emerging as a trillion Dollar opportunity, she said the IT services market would grow at 8.3 per cent compounded annual growth rate (CAGR) from $ 800 billion in 2002 to $ 1.2 trillion by 2006.

Of this, Gere said, the key business process outsourcing (BPO) would register a 10 per cent CAGR to touch about $ 300 billion by 2006, from the existing $ 200 billion market.

"This is going to be a very interesting opportunity," she said, adding that customers were looking beyond cutting costs and improve efficiency.

"Given the economic resurgence, organisations which were looking at India and other low cost countries to cut costs are now looking at the next level of outsourcing to do it better and further to do it differently," Gere said.

She said IDC was predicting a marginal 0.4 per cent growth in IT spending this year, as compared to negative growth of -4.1 per cent.

Gere said the worldwide IT spending had dipped from a 10.8 per cent growth in 1999 to -4.1 per cent in 2002.

With the recent growth in US economy achieving a 7 per cent growth in GDP, she said several businesses were expected to better their performance in the current quarter.

IDC US infrastructure management research programme manager David Tapper said utility computing and on demand computing would be the big drivers in IT in future, and global IT majors IBM and HP were already ahead in this segment.

Terming the offshoring outsourcing as a phenomena in the next five years, he said, eventually on demand computing would make offshoring irrelevant in the future.

Stating that IT giants were on a consolidation mode, Tapper said, Indian companies should either grow by acquiring firms or be required as only a few major firms would be in the market place.

PTI