Experts, including Dressler and others at information-technology consulting companies, estimate that using offshore outsourcing can cut costs by 25 percent to 50 percent.
Program analysts in the United States earn $70,000 to $90,000 annually, compared with $15,000 to $17,000 in India, said Anup Popat, CEO of Systems Technology Group Inc. (stglink.com). Systems Technology Group is an information-technology business in Troy, Mich., with workers in India and the United States.
Even with the potential for huge savings, those considering offshore outsourcing need to be aware of what to look for, how they can benefit and the potential risks involved, said Christine Overby, an analyst at Forrester Research Inc. in Cambridge, Mass. (forrester.com).
"Business owners must consider the fact that this is not just about a question of costs," she said. "You can undoubtedly find workers who will work for $15 an hour, but are they going to be qualified enough to handle the type of project you're working on?"
Much offshore outsourcing is limited to mundane tasks: programming, maintenance and conversion of mainframe systems to Web-based models, Overby said.
But users and providers say they can't ignore the benefits.
Syntel Inc. of Farmington Hills, Mich. (syntelinc.com), provides outsourced information technology services for automotive and other industries. Nearly all the clients signed last year called for at least some amount of offshore work, said Syntel CEO Bharat Desai.
About 2,000 of Syntel's nearly 3,000 employees work at two offices in India. Syntel has 1,500 employees at Mumbai and 500 in Channi, Desai said, and plans to expand.
The story is similar for Covansys Corp. of Farmington Hills, Mich. Covansys (cbsinc.com) plans to increase its employees in India to 5,000 from 1,500 over the next two years and spend $10 million to expand. Clients have included Ford Motor Co. (ford.com), Johnson Controls Inc. (johnsoncontrols.com), Visteon Corp. (visteon.com) and GM (gm.com).
India's attractiveness stems from being the home of the Carnegie Mellon University Software Engineering Institute ([email protected]) and having a large pool of information-technology workers that researchers estimate will reach 1 million by 2005.