Most of the IT jobs going overseas are those the U.S.-based IT staff doesnt want to do, according to Weber. These tend to be focused and defined tasks such as programming. Some offshore IT providers are looking to provide more services, but the best fit tends to be fairly low-skill-level IT tasks such as coding, he says.
Whenever an American company sets up operations out of the country, there will be certain geopolitical risks. India has been the most popular choice for IT outsourcing, but there were scares there last year when relations with neighboring Pakistan deteriorated to the point where nuclear warfare was threatened. American companies were unwilling to move new projects offshore until they were sure things were going to cool off there, says Weber.

The other risk for insurers is delivery. Once you send a project offshore, are you going to get the results you expect? Weber asks. There always is a risk of project failure, but when the project is being conducted overseas, you add an element of uncertainty and increase the risk the project will fail unless you manage it very carefully, he says.

Most offshore IT projects belong to large insurers, but Weber believes once the medium- and small-tier insurers understand the model, the benefits will become available to any size carrier. The problem smaller carriers face is dedicating resources to focus on an offshore effort. Weber says many consultants are developing offshore practices to assist in such a project.

Offshore IT is not shooting fish in a barrel, says Weber. Carriers need to be careful doing this, and they need to keep the internal staff engaged. They need to measure results so they know they are getting what they think they are getting. Despite those warnings, Weber believes it is the direction to travel. This clearly represents a huge opportunity for most carriers today.