In the midst of risks that flat employment and tight credit pose, there would be a sharp increase in the spending and earning of U.S companies, according to the findings of Duke University/CFO Magazine Global Business Outlook Survey. While 31% plan to acquire this year (as compared to only 19% last February), it is believed that the outsourcing is also expected to grow by 4% in the next 12 months.
Another interesting annual survey by BDO, one of the America's leading accounting and consulting organizations, has indicated that outsourcing will bounce back in 2010. Overall, CFOs say they are currently outsourcing to more locations. Below is a comparative chart of outsourcing hotspots:
The report further emphasizes that China is the most preferred location for outsourcing in the future, by U.S tech companies. “Last year, fraud issues and international strife caused U.S. companies to focus on domestic services as opposed to outsourcing,” said Don Jones, Partner in the Technology Practice at BDO. “This year, however, the economy has significantly squeezed margins and companies have had to resume outsourcing to reduce their operating costs. Asia and India are the leading outsourcing locations because both regions have already built the necessary infrastructure to quickly support increased demand.”
Bob Pearlman, Partner in the Technology Practice at BDO, told www.globalservicesmedia.com , "With the global economy beginning to recover, tech companies are emerging from the period of retrenchment that saw them outsource more to the U.S versus Asia in 2009. Another contributing factor is the comfort level reached by many companies who have found that “doing more with less” is a feasible solution and have decided not to go back to pre-recession levels of domestic employment." He further added, "It’s important to remember what a strange year 2009 was – given the data from 2008 and this year, it looks like the 2009 data may be a one-year statistical blip caused by extraordinary external factors. Also, domestic political and regulatory uncertainty may be a factor causing companies to do more business overseas than here in the U.S., particularly in China and Southeast Asia."
There are a number of factors that will continue to haunt the CFO at the dawn of the new decade. Technology, uncertain business and/or political climate, intellectual property risk and exploitation, international business and tax regulations, and training of international employees are amongst the most critical. While greater number of CFO will continue to depend on offshoring to manage costs, it is important to note that not many may have explored the option of rural onshoring.