He said organizations have five options, they can - insource, cosource, outsource, nearshore/offshore or offshore. But Nair believes when it comes to outsourcing, most Australian organizations are still going for the "low hanging fruit".

In the Asia-Pacific region in 2004, Nair said A$84.6 billion was spent on IT services, but only 0.3 percent of that amount was offshored.

"But its offshoring and moving up the outsourcing scale where companies can generate significant returns," he said.

Nair said by 2009 IT services spending will rise to A$121 billion with 1 percent of that total offshored.

Jim Longwood, Gartner research vice president, said there has been a strong shift to best of breed outsourcing.