U.S. Companies Put The Brakes On Outsourcing

Overseas outsourcing contracts are down by a third from last year’s pace reports Business Week. One of the biggest reasons for the decrease is that outsourcing contracts from U.S. companies have declined by 70 percent in the first quarter of this year.

This slowdown was predictable. As countries like India face hyper-growth in their IT industry, the expectations of Indian IT workers rise and so do salaries. Apparently, the fast growth is also causing quality problems (see salary, quality story here). With increasing costs and diminishing reliability, the incentive for U.S. companies to go offshore for their IT needs becomes less compelling.

In spite of offshore pressures, IT is still considered to be the fastest growing industry in the U.S. over the next several years. (see Department of Labor report).