8.6 ICT: a global service

There is a growing trend to both outsource and offshore ICT services. The broad terms used in industry (mentioned next) help classify the type and role of ICT services.

Information technology outsourcing (ITO)

Examples of ITO are:

• information technology support, which may include designing computer networks or help-desk assistance
• software development, which involves creating programs to help businesses manage their finances, use video conferencing or manage websites.

Business process outsourcing (BPO)

Examples of BPO are:

• data processing, which may consist of maintaining a company’s financial records or customer lists using a database
• employee services, which refer to some human resources activities that relate to payroll or job applications.

Knowledge process outsourcing (KPO)

Knowledge process outsourcing relates to areas that are more specialised, and that require a higher level of knowledge and skills; examples include the legal, medical and financial consultancy or animation and design areas. Pay rates are significantly higher.

In 2010, the OECD (Organisation for Economic Cooperation and Development) estimated that the general offshore market for services was US$252 billion. The ICT industry is a significant and growing contributor to this market. Global outsourcing is not a new process. It started in the 1960s and 1970s largely in the manufacturing area – for shoes, clothes, electronics and toys. Transport and travel evolved next, but now the growth is in business services that generally have an ICT basis, such as telecommunications.