As more IT projects are outsourced offshore, North American and Western European IT services vendors, to compete, must shift their domestic resource mix to meet three criteria: interact face to face more often, allow for competition based on business value instead of price and establish requirements for innovation and quality, according to Gartner Inc.

"Offerings that meet the criteria exploit the inherent problems with offshore services – namely communication within a global delivery model, and the vertical and business process expertise necessary to demonstrate business value," said Alex Soejarto, principal analyst for Gartner. "In order to compete effectively with offshore vendors, North American services companies need to re-evaluate their delivery methodologies to include larger components of a project that can be delivered off site."

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