An InformationWeek survey finds that U.S. IT executives are planning more offshore outsourcing in the coming year; yet savings may fall as Indian wages are forced up by competition. By Thomas Claburn

With more American companies moving IT work offshore to India, demand for quality talent is driving up wages. Nearly half of the 172 business-technology executives surveyed by InformationWeek who are engaged in offshore outsourcing expect to spend somewhat or significantly more on offshore outsourcing this year than last, but competition for talent in India could reduce anticipated cost savings and hasten the growth of markets such as China where IT labor costs even less.

The list of American companies competing for IT talent in India is growing: America Online last month confirmed it’s holding internal discussions with an eye to opening a development office staffed with a small number of programmers in Bangalore, India, and search-engine company Google Inc. last month said it plans to hire about 100 engineers at a new software-development center in Bangalore in March. Also, The Wall Street Journal reported recently that IBM, which already has a significant presence in India, plans to employ almost 5,000 programmers in India and other overseas locations to update software for running the vendor’s business. Outside the tech field, other brand-name companies, from General Electric to General Motors, either directly employ thousands of IT professionals in India or outsource jobs to service providers operating there.