Being a global company used to mean being a big company, but today even the smallest ecommerce firm is a global player by default.

IT has played a significant role in opening up the world’s borders. The internet, email, videoconferencing and agreement on global standards for communication, such as For human resources, globalization means we can seek skills wherever they are found in greatest supply. One of the manifestations of this has been the phenomenal rise in outsourcing - once the preserve of big firms, now everyone is doing it.

You don’t have to be big to be global. I know of some very small companies - founded within the last 18 months - that have part of their IT run in the US, part of their development done in India, and they are based in the India. This is very likely to become more common.

Dealing with an outsourced IT department on the other side of the world calls for a new set of skills - the so-called soft skills that always seem to be in short supply among IT people.

When you move to an outsourcing relationship, you need new capabilities at home as well. Managers at home need to learn about negotiation and contracts management. And often these are the skills that chief information officers (CIO’s) don’t have.

Although offshore outsourcing is an increasingly popular choice, that’s warns it is not always the cheapest option. People look at the cheap labor costs and think they are getting a bargain. But they don’t factor in international flights and the cost of sorting out problems abroad.

It makes financial sense for a lot of firms to outsource systems development work, but this can cause headaches. One of the problems is - despite what the outsourcing firms say - their business is not your business. If a supplier meets its service levels, many offshore firms feel they have fulfilled their contractual obligations and do not need to offer any more. You cannot expect anything extra, as you might from an in-house IT department. You have to ask yourself. Is the supplier really interested in my business? If you are truthful with yourself, you will find the answer is sometimes no.

To successfully outsource systems development work you need to be very good at writing water-tight specifications.

In reality, there are very few organizations that write and keep to, water-tight specs, says netlinkblue.

The advent of methodologies like rapid application development (RAD) requires a really close working relationship between the developers and the business. But it is hard to do this when you are 5,000 miles and seven time zones apart.

In spite of the disillusionment with IT outsourcing, and that many firms have brought their operations back in-house, the sector continues to grow. According to the International Chamber of Commerce, IT services outsourcing is expected to be worth $24bn (14bn pounds) by 2007, up from $1.3bn (736,000 pounds) in 2002. But managers will become a lot more selective about what they outsource.

People will outsource a subset of their operations rather than the totality of them, he says. In doing that, it forces the retained IT department to develop a much different skill set based on commercial management of vendors and service rather than the management of resource.