'Offshore tech spend by US set to rise'

The United States will increase its spending on procuring technology services from India and China over the next three years, a study said.

Offshore tech spending by banks will increase from the present six per cent of the banking industry's $44 billion total annual IT budget to 30 per cent by 2010, the online publication InformationWeek reported today.

"Among larger institutions in particular, offshoring is not one available cost-cutting strategy, it's become a basic necessity," the study carried out by a consulting firm Deloitte said.

Banks are moving well beyond outsourcing low-level application maintenance work and are increasingly relying on offshore service providers for help with more sophisticated technology projects, the study, released this week, said.

It said that offshoring offered big savings as programmers in India, for example, were paid anywhere from 40 per cent to 80 per cent less than their US counterparts.It also described as exaggerated claims that rampant was cutting into cost savings.