Does Offshoring Endanger Internal IT Skills?

Ann All

On Friday, I wrote about the challenges presented by decades of American companies sending manufacturing work offshore. Among other things, widespread offshoring has left U.S.manufacturers ill prepared to produce promising new products like the batteries needed to power electric cars. General Electric CEO Jeff Immelt is among those calling for the nation to refocus on its manufacturing and R&D capabilities. CEOs need to position their companies for long-term success rather than short-term gains, Immelt said.


Similarly, companies may suffer from internal knowledge that is lost when IT functions are offshored, according to a recent story. The story cites leaked documents (are there any other kind?) circulating among managers at UK bank Lloyds TSB that express concerns over missing skills among both internal IT staff and offshore workers.


Charles McLachlan, director at consultanting company Amsphere and visiting professor at the University College London, said:


Many people in charge of buying IT systems come from a background and have run them themselves. The offshoring of software development is leading to skills shortages at all levels of IT.


Late last year I wrote about the Lloyds TSB Group Union's request that the UK government require banks accepting capital infusions to stop offshoring jobs. At the time of that post, Lloyds TSB had reportedly outsourced some 4,000 jobs to India, with plans to send more offshore following an acquisition of Halifax Bank of Scotland. Whether to attach strings when companies accept government aid is a highly charged issue, as I wrote in March, again addressing the fact that many banks offshore at least some IT functions and are even more likely to do so when acquisitions create costly and complicated integration projects.

Add Comment      Leave a comment on this blog post
Jul 6, 2009 3:21 AM Virgil Virgil  says:

Finally, it sounds like companies are starting to wake up.

Take a look at some of the recent articles on my site at and you will see the financial ramifications that are occurring.

For every American that is put out of work, or had their pay substantially cut, it directly affects the GDP and I believe in the near future, the GDP will begin to trend down because of the effects of the last year.


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