Information Technology – Shrinking Industry and Outsourcing Imperatives

Information Technology industry was formed when computers began to be used for business applications from earlier scientific applications. Businesses realized that many manual and tedious processes could be automated and they bought computers and hired people with programming experience and tasked them with automating the manual systems in an office or head quarters. Such IT personnel were either part of finance department, HR department or marketing department. A career evolved from programmer to business analyst to manager.
Over a period of time the branch or office automation extended to enterprise automation and a computer department which was local to a location became shared services operation and by itself a separate department. In such a scenario millions of IT professional were needed and as businesses added computer software engineers, operators etc and a position of Chief Information Officer (CIO) was also created. The huge demand could not be met and a services industry was created in the 1980s where company’s started to undertake such jobs to provide IT service to businesses. The IT industry of hardware, software, services and internal IT work force is today a $1.6 trillion global industry and growing at an average rate of 3-5 percent. It is estimated that the total IT workforce globally is about 20 million of which about 3 million exist in India alone.
So far the industry has been growing due to un-satiated demand and as far as technology is concerned there is continued demand for all generations of technology from the beginning assembly language programming in the 80’s to COBOL in the 90’s to dot net and java in the year 2000’s. the in-house IT departments have coexisted with the service providers sharing almost 50 percent of the workforce between them.
Next generations technologies like cloud, social media, mobility and analytics have created a very new way of using Information Technology where a business only pays for services and does not need to own the infrastructure of computers. This is very attractive to businesses that had to in the past make significant capital investments on infrastructure and build or buy licenses for business applications. This also obviates the need to have in-house employees. Large number of the existing employees of the workforce would not have the skills in their present roles to tackle modern technologies around these new paradigms and compounded with the fact that the companies also in future desist from owning infrastructure assets could drive a all together new paradigm to outsource work to vendors capable of delivering such modern technology solutions.
It is likely that the workforce in information Technology may shrink in future as few of the present work force transform himself to learn new technologies and there may be a much faster pace in change where business retire their old infrastructure.

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