Offshore outsourcing is the most commonly used term, but the globalisation of IT services is about much more than just outsourcing. Companies don't have to outsource to gain the cost benefits of moving IT work overseas.
Many organisations choose to set up their own IT centres overseas - a business model commonly described as a captive site.
The Indian trade body NASSCOM estimates that some 55 per cent of its offshore business comes in the form of captive sites. In other words, less than half the Indian offshore services sector derives from offshore outsourcing.
DaimlerChrysler has set up its own research and technology centre in Bangalore. Reuters has software development centres in both Bangkok and Bangalore. DHL has opened an IT shared services centre in Prague covering the whole of Europe.
Tesco has a policy of retaining IT functions in-house, but this has not stopped the company setting up its own development centre in Bangalore.
The offshore trend isn't new - it's the use of the word offshore that is novel. For decades in the UK we have used software developed overseas - in the USA and Western Europe. The UK is also a recipient of offshore business.
IBM and Microsoft may be USA-based companies but they employ British IT professionals for some of their research work. We just don't tend to think of this as "offshore" business coming to the UK.
There's also the question of near-shore and far-shore. Near-shore usually refers to countries that are geographically close to our own and therefore, in theory, closer to the UK in culture, business environment and legislative systems.
Moving IT work to a near-shore location is seen as a lower risk option, more secure than a less well understood far away destination. But what does near-shore mean to the UK? Is Poland near- or far-shore? What about Russia?
Arguably we have more in common with some far away locations such as South Africa and would find it easier to do business in this far-shore destination than in, say, Slovakia or Romania, which are geographically near-shore.
In 2004 I chaired a group set up by BCS to examine the impact of the globalisation of IT service work on the UK's IT profession.
We adopted the term 'offshoring' as a shorthand way of describing the movement of IT work overseas, whether or not this comes about through outsourcing or the creation of captive sites. We included both near-shore and far-shore in our definition of offshoring.
Our report looks at the challenges faced by British IT professionals as they gear up for the globalisation of the IT service sector. We analysed the strengths and weaknesses of our profession today and looked at opportunities for the future.
We devised a new career model for this new era which recognised the need for all IT professionals to develop their interpersonal and project management skills, combining business and IT expertise.
We also looked at best practice and ways in which the government, employers and BCS could help those IT professionals whose work is moved overseas.
Next time you see a commentary or statistical analysis about the offshoring trend, take a closer look.
Do market figures refer simply to offshore outsourcing or do they accurately reflect the whole offshore trend? And does "offshore" include both near-shore and far-shore?
If we are to properly understand what is happening and prepare our profession to meet the challenges of the future with confidence we need to look at the whole picture.
Elizabeth Sparrow is the author of 'A Guide to Global Sourcing: Offshore outsourcing and other global delivery models' and Chair of the BCS Working Party on Offshoring.
