According to Forrester Research, a recently held panel on offshore in the insurance industry revealed divergent levels of insight and experiences. These firms represent a reality that the move offshore is not a simple six-month project that firms can dial up instantly.

Forrester's research shows a four-stage migration that companies go through over a period of 24 to 60 or more months.

• Bystanders. Despite the rising tide of offshore hype, the reality is that most firms are either doing nothing or just starting their journey to locations like India, Russia, or the Philippines. Today, more than 60% of the Fortune 1,000 falls into this segment. These firms have no offshore relationships. Research shows that the perceptions of those with no overseas experience vary dramatically when compared with the perceptions of companies that do have offshore IT or BPO expertise (see figure, below).
• Experimenters. Another 25% to 30% of Fortune 1,000 firms have offshore experience and relationships with offshore vendors, but offshore is not a key element of their overall IT strategy or spending plans. This segment is typified by its use of multiple offshore providers -- often more than 10 different firms -- as well as its perception of offshore as providers of staff augmentation or low-cost contractors. For experimenters, offshore spend often represents less than 20% of their overall IT third-party services (in most cases less than $2 million) budget.
• Committeds. A small group of firms -- 5% to 10% of the Fortune 1,000 -- has scaled its offshore efforts to incorporate sophisticated governance techniques, such as creating an offshore-specific sourcing office and focusing its spending with only two to three key providers. These firms employ the offshore suppliers for more complex application maintenance and mission-critical development services.
• Full exploiters. At the top of the offshore pyramid sit those companies -- less than 5% of the Fortune 1,000 -- that take complete advantage of offshore through the combination of development of global sourcing as a core skill and investment in the IT process maturity to take a high percentage of work offshore. They have retrained their staffs to use a consistent methodology and CMM-based processes to drive their higher utilization of offshore suppliers. For example, one company in this camp has 95% or more of its legacy maintenance being done in India.