Offshore Outsourcing Alive and Well in Barbados

Ah, Barbados. Caribbean paradise, land of endless beaches, palm trees swaying in the ocean breeze, frozen drinks in pastel colors and information technology. Huh? Well, yes. As the economy in the United States continues to stumble, IT departments are looking for more ways to send their technology projects on a working vacation.

Last year CIO wrote about offshore outsourcing (“Hands Across the Waters,” Sept. 15, 2000), a hot topic then because of the staffing shortage. Today, the biggest driver is the price tag. For example, Enherent, a Dallas-based IT solutions provider, contends that projects that go through its solutions center in Barbados (where the likes of J.P. Morgan Chase & Co. take their business) cost 30 percent to 40 percent less than what they would cost stateside. “Besides that, we have the ability to acquire the skills we need very quickly,” says Nigel James, Enherent’s general manager. “If the skill isn’t there, we can import it from Asia and anywhere else. That’s currently not so easy to do in the United States.” (To read about domestic outsourcing, see “Outsourced in America,” Page 86.) And, he adds, Barbados has advantages over offshore options farther away: English is the primary language, the dollar is accepted, and the plane ride from the United States is short.

Other outsourcing companies can expect booming business from a slowing U.S. economy. According to a study from IDC (a sister company to CIO’s publisher, CXO Media), U.S. companies will spend more than $17.6 billion on offshore outsourcing in 2005. A recent poll conducted by Syntel, an outsourcing company with headquarters in Troy, Mich., found that the pace of sending projects offshore is increasing, and Gartner analysts also predict accelerating growth in the area. Cost is the number-one justification, with availability of resources coming in second. India remains by far the most-used country for offshore outsourcing. But as more companies like Enherent get off the ground, CIOs may have other options. And they may find themselves explaining to their bosses why they really need to go oversee the project. In person.