Technology company execs see decline in outsourcing jobs

Now comes another survey that suggests a decline in outsourcing jobs overseas and an uptick in U.S. executives considering keeping operations in the country.

Archstone Consulting reported in early February that the increase in foreign wages and shipping costs are just two reasons companies might return their manufacturing operations to the U.S. Some of the increases included a 135% increase in ocean freight costs and a 44% increase in Chinese manufacturing wages.

BDO Seidman, a San Francisco-based accounting and consulting company, reports that a recent survey suggests a decline in international outsourcing in 2009. BDO surveyed a group of chief financial officers of technology companies with annual revenue of $30 billion.

“This year we are seeing three global factors that are causing U.S. technology companies to pull back from traditional outsourcing locations, led by the recent boom and bust of the worldwide economy. Satyam’s fraud case and the terrorist attacks in Mumbai are causing a lot of companies to reconsider operating in India. And supply chain and shipping cost issues in China are negatively impacting the attractiveness of outsourcing technology operations to the Far East,” said Douglas Sirotta, a partner in BDO Seidman’s technology practice.”

Key results from the BDO survey are:
• 62% of chief financial officers (CFOs) at leading U.S. technology companies say their company outsource some or all services or manufacturing.

• 22% of the CFOs say the United States is the outsourcing destination they are most likely to consider in 2009

• 16% of the CFOs say China is the outsourcing destination they are most likely to consider in 2009

• 13% of the CFOs say India is the outsourcing destination they are most likely to consider in 2009

• Less than half (42%) of the CFOs indicate that they have operations outside the U.S., compared to nearly double that amount (79%) last year.

• Nearly a third (29%) of respondents say their primary concern regarding international growth is an uncertain business or political climate. About a quarter (26%), cite international business and tax regulations, with 21% citing currency risk, 14% intellectual property risk and exploitation, and 10% training of international employees as their primary concern.

• Of those outsourcing, the most common functions being off-shored currently are: manufacturing (54%), IT services and programming (46%), research and development (35%), distribution (35%) and call centers (35%).