H1-B visa-holders have made the headlines a lot recently––first as the country’s blue-eyed boys making the megabucks, and now for the large numbers sitting it out on the benches.

In May 1998, the US issued 65,000 H1-B visas, with over a half this number going to those engaged in IT-related work. By July 1999, the total number had jumped by over 75% to 115,000, of which a healthy 60% were issued to IT professionals. Typically, the numbers were shooting because of the inherent IT skill shortage in the US. IT solutions had been widely embraced as a necessary ingredient for business success, and e-business, ERP, client-server and migration services were in great demand.

The dream lasted two years till the last quarter of 2000, when profit warnings across the IT slate indicated the beginning of a slowdown. Belts were tightened and IT budgets came under pressure, with costs at the wrong side of the CFOs’ knives. But time-to-market remains critical in the global economy.

Why outsource? It provides available skilled IT personnel resources at a fraction of the cost, while also allowing an accelerated project delivery schedule. This is because one is working on the time difference and converting it into an advantage. The projects are fixed-price contracts, lower-cost doors built into a watertight deadline edifice.

Majority turn believers

The Harvard Business Review identified outsourcing as one of the most important management ideas and practices of the last 75 years. Till now, technology and thought leaders were doing outsourcing offshore. That is changing as a majority of the Fortune 1000 companies realize the benefits.

Outsourcing is defined as the transfer to a third party of the continuous management responsibility for the provision of a service, governed by a service level agreement.

Outsourcing itself is a relatively new term, and can be applied to many different types of commercial relationships between buyers and providers. Co-sourcing, subcontracting, facilities management, managed services and strategic in-sourcing are different faces of outsourcing.

Ultimately, outsourcing is merely a way of getting something done, by someone else.

What is interesting is how outsourcing enables an organization to run more efficiently and cost-effectively. And how it improves the level of productivity throughout an economy by focusing on what it is best at. The US technology companies have been staunch believers in the benefits of offshore outsourcing and many have set up wholly owned offshore development centres. Texas Instruments, Motorola, Citibank, Oracle, Apple and Arthur Andersen are but a few cases in point. Others have outsourced their offshore development work to one vendor or the other. Cisco, General Electric, Nordstrom, Target Corp and Northern Telecom are some examples of this movement. Today, over 220 of the Fortune 1000 companies are outsourcing offshore.

But what are the different offshore outsourcing alternatives? There are five types––one is professional services, the second individual project outsourcing, the third an offshore development center with dedicated personnel and resources, the fourth a joint venture with an offshore vendor, and the last a wholly owned offshore subsidiary.

Speaking to US corporations, one found increasing commitment to outsource offshore. Boeing has been outsourcing to India. It is the largest aerospace company in the world, with its heritage mirroring the history of aviation; it is now looking to build strong relationships with its providers.

Providian Financials is the fifth-largest bank-card provider in the US. Realizing that time is one of the customers’ most valuable resources, Providian is considering outsourcing to Indian companies. West Group, the leading provider of e-information and solutions to the US legal market, is considering going offshore for its outsourcing needs by September 2001.

The big change that one is witnessing is that no longer are technology companies the only ones doing offshore outsourcing. This slowdown is getting mainstream companies in manufacturing, utilities and healthcare to look at outsourcing.