When will UK Govt offshore their IT?

Today I attended a conference at Intellect- (Nasscomm/CII equivalent trade association of high tech industry in UK).

Almost every speaker (Business School prof, industry analyst, Government stats officer) talked about India and China. they all agreed that India is the top most destination of choice for offshoring and will remain so for foreseeable future. did you say, ‘Big Deal?’.

Here is what i heard for first time from UK stats officer, Biz school prof and analyst-

• Between 02/03 about 10% firms offshored services. The no is more than 20% now is what i then heard from the industry analyst. That makes it obvious that ‘offshoring’ is no more a new thing.

• Offshorers are also more likely (51%) to exporters of services. That keeps the trade balance positive.

• Offshored services show higher marginal productivity than domestically (UK) outsourced services. Its not about just labour cost.
• Both UK&US run trade surplus when it comes to services (IT+Business). Globalisation helps UK&US as much as it does India.

Coffee time talk is my favourite when you go to conferences. You exchange lot more customised content. I know and hear from the industry analyst that UK govt spends 30% of UK’s IT budget but offshores almost none of that. While rest of the UK (Pvt sector) offshores atleast 20 % (by volume) for now and could go up to 50% soon.

The word ‘almost’ is interesting beacuse one can find very weak signals on UK Public Sector considering and ‘doing’ rightshoring/offshoring. One of the UK companies with their office in India is talked about to have offshored part of work on NHS. There are also examples of some work from central govt and NDPBs (Non Departmental Public Bodies) being offshores. Though this is very very insgnificant part of 16 bn budget. With the abovementioned bullets in the backdrop, I wonder, what would be the shape of the pie, come 2010.

Any thoughts?