Outsourcing Business Smarts Replacing Outsourcing Hysteria

Share Article

US. companies actually import $20 billion more in jobs than they export.

If you buy into the hysteria over outsourcing, think about this: American corporations take home more money from overseas businesses outsourcing service jobs here than they lose from domestic companies sending service jobs to foreign countries. US businesses took in $61.4 billion as an offshoring destination – providing labor to foreign interests – in 2004. The same year, the United States outsourced far less: $43.5 billion worth of jobs.

When it comes to supplying expertise in areas like accounting and legal services to other countries, corporate America earns a brisk surplus.

“The rest of the world outsources more to the US than the other way around”, says Shang-Jin Wei, head economist of the International Monetary Fund’s trade unit. According to Scott Wilson, co-author of The Black Book of Outsourcing, “If every county in the world decides to cut down on service outsourcing, the United States will lose the most”.

In fact, inside the next ten years, the United States will emerge as a top destination for global offshoring, predicts the authors of "The Black Book of Outsourcing", the recently released outsourcing guidebook, already outselling the stacks of anti-outsourcing publications. The silver lining forecast is highlighted by the observed staging of consequential events, and is drawing critical confirmation by global economists. This corresponds with Bureau of Labor Statistics that by 2012, service jobs will be the fastest growing employment sector in the US. “The growth in US service jobs will largely be a consequence of the United States becoming an offshoring powerhouse”, added Wilson, "and executives should prepare now for the shift in occupational demands."

By the year 2015, the authors of “The Black Book of Outsourcing: How to Manage the Changes, Challenges and Opportunities” (John Wiley & Sons Publishers), Douglas Brown & Scott Wilson, calculate the top five outsourcing destinations for Offshoring will be, in order:

1. China

2. India

3. USA

4. Russia/Eastern Europe

5. Brazil/South America

The counter-intuitive foresight is evidenced by the latest offshoring evolution taking current form in the nearshoring movement with an evolving shift to “homeshoring” outsourced services back to the US. In its World Investment Report 2004, the United Nations Commission on Trade and Development argued that offshoring of corporate service functions could become "the next global shift". The United States, in particular, should be the biggest winner in meeting the need that the shift for service employees is creating globally.

"Offshoring, the mantra for cost savings, undoubtedly offers significant financial benefits for companies across a wide range of fields and sizes. Undertaking such a venture, however, requires a cost benefit analysis that includes downsides such as political instability, security concerns, legal difficulties, language and cultural barriers, intellectual property rights protection and time zone differences", says Wilson.

With nearshoring, organizations are becoming aware of the benefits of outsourcing operations offsite, but in a way that is convenient — physically, culturally, managerially and financially — to the overall business. This has become a viable solution for many companies because nearshore country locations offer the advantage of similar time zones, ease of travel and potentially greater control due to familiarity or physical and cultural proximity to the customer.    

“We have identified a US trend to move non-critical functions offshore while performing critical projects with nearshore or homeshore resources. This model has proven to be successful for many companies because it allows them to operate in almost the same mode they have become accustomed to for years. The operation becomes more like just another office location rather than a separate entity”,says Brown, "We next expect to see forward-thinking companies moving their offshored operations to US regional pockets of higher than average unemployment."

WHAT'S NEXT FOR US OUTSOURCING

"We can expect America to become a super-contender, as well, in the offshoring provider ranks” predicts Brown. Also contributing to the prediction is a leveling global outsourcing playing field. The costs of supplying services are anticipated to eventually level off. The price of fuel, professional personnel shortages, customer dissatisfaction political unrest, and demands, and upward creeping costs of labor are major factors will that propel and disrupt the balance. “Opportunistic US entrepreneurs and workers can reap the benefits by preparing for the developments” advises Wilson.

Brown & Wilson optimistically counsel that workers in technology, finance, human resources and business processing professions begin to re-tool their skill base to include the fundamentals of outsourcing processes. And companies are betting Brown and Wilson are dead-on target. “Homeshoring”, “smartsourcing,” and US-based outsourcing business organizational restructuring are among our most requested consulting engagements along with community assessments for outsourcing attractiveness to vendors”, the author/consultant team disclosed.

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Douglas Brown