Offshoring: Is the IT talent pipeline going down the drain?

Over-reliance on outsourcing rather than nurturing home-grown IT talent could create problems for finance firms five or ten years down the track.

While outsourcing programming and other tech jobs to India eases the pressure on the skills shortage in the UK, it also means that companies aren't building up their in-house expertise.

"I think what's happening on the supply-side, because so much is going offshore, the raw talent isn't being developed," says Simon La Fosse, director of the CIO practice at recruitment firm Harvey Nash.

But Martyn Hart, chairman of the National Outsourcing Association says that outsourcing low-level programming jobs is a good thing. Technology is changing so fast that particular programming skills have only a limited shelf-life.

"All those programmers beavering away in India will in fact be obsolete. You may have been the best Windows 95 programmer, but what use is that now? What companies should be doing is bringing in people to be managers and train them in business processes."

Paul Freeman, former head of infrastructure at Barclays Capital, the investment banking arm of Barclays Bank, says employing banks of low-level programmers in the City just isn't economically viable - and the shift offshore frees up junior City-based technologists to do more interesting work.

"Because you're trying to run a relatively mean IT machine, it meant you could employ people on value-added tasks," says Freeman. "My own experience is always mix offshoring low-level programming, and have nearshore and onshore."

"You want your best people close," he adds.