Healthcare Matters

Outsourcing in the US tech sector has declined for the third straight year, according to a new study from BDO USA. BDO polled 100 US technology chief financial officers and found that just 32% say they currently outsource services or manufacturing to companies outside of the US. Nearly twice as many companies were outsourcing in 2009 (62%), so the shift is noteworthy.

According to the report, the outlook is positive for tech industry jobs to stay in the US: some 50% of CFOs plan to hire more employees this year. Among the companies who are not currently outsourcing, 80% report that they are unlikely to outsource services or manufacturing overseas in the near future.

“With unemployment numbers still hovering above 8%, pressure is mounting from Washington to bring jobs home. The tech industry seems to be moving in that direction, which is good news for US job seekers,” said Paul Heiselmann, partner in the Technology and Life Sciences practice at BDO USA, LLP. “Bringing services and manufacturing back to the US is also a smart move for tech companies looking to improve the quality of service and reduce exposure to international risks and major supply chain disruptions.”

The report went on to note that, in a major shift, manufacturing went from being the most commonly outsourced function in 2011 (53%), 2010 (51%) and 2009 (54%), to the least cited outsourced function in 2012 (33%).

The natural disasters that rocked Thailand and Japan in 2011, causing major delays in supply chains that are still not fully remedied, are the likely contributors to this change. Of the 32% of companies who are outsourcing, IT (63%) and R&D (51%) are the top outsourced functions. More CFOs also report outsourcing call centers this year (37% vs. 12% in 2011). After declining in popularity from 2008-2011, India now leads the list of countries to which companies are currently outsourcing. In fact, 62% of companies outsourcing report that they source services from India, a major increase from 2011 (29%). China also remains a top destination, with both Western & Eastern Europe gaining in popularity.

With any luck, perhaps call center outsourcing will see a similar decline over the new few years…

—Tom Finn

Source: Procurement Leaders and BDO.