As the tech industry moves jobs stateside, companies are looking to bolster their workforce in 2012. The report pointed, “In fact, 50 percent of CFOs plan to hire more employees this year. The outlook is positive for tech industry jobs to stay in the U.S. Among the companies who are not currently outsourcing, 80 percent report that they are unlikely to outsource services or manufacturing overseas in the near future.”

The unemployment numbers are still above 8 percent, there is immense pressure to bring home jobs. The technology industry is doing just that.

Over the past few years, companies have seen a fairly steady decline in headcount and have needed to do more and more with fewer employees. Paul Heiselmann and Aftab Jamil, partners at BDO USA  articulated,  “But there’s a limit to productivity with fewer resources, and it’s possible we’ve reached the tipping point. Not having enough people to do the job is problematic. As companies feel more optimistic about improving economic fundamentals in the U.S., they have more confidence to hire full time employees, rather than the focus on part-time contract workers that we saw last year. Uncertainty related to sovereign debt issues in Europe as well as the real estate overhang in the U.S. continue to contrast these positive factors, and are being closely monitored as part of the full time hiring assessments by CFOs.” 

Other major findings from the 2012 BDO Technology Outlook Survey include:
Global Services interacted with Paul Heiselmann and Aftab Jamil to discuss the key findings of the report.

                             Aftab Jamil, Partners BDO USA                       Paul Heiselmann, Partners BDO USA     

1. Sales and R&D Departments See Greatest Increase in Headcount. With 91 percent of CFOs predicting that hiring will increase or remain steady at their organizations, there is renewed confidence for jobs in the industry. CFOs expect to see the most new positions in the sales and marketing (41 percent) and R&D functions (23 percent), a signal that companies are aiming to bolster the product cycle. Other CFOs expect to hire the most new employees in manufacturing (15 percent), administration (12 percent) and management (5 percent).

BDO USA, LLPs viewpoint: Sales and R&D are cyclical and when innovation is rewarded in the marketplace, companies will spend more to create new value. Coming out of the recession in the U.S., companies are placing a greater focus on sales and R&D to generate revenue and a greater return.

One trend we’re seeing in R&D is many more companies questioning where they put their R&D teams. Over the last 10 years, companies have wanted their R&D teams closer to the end market where the products are sold so they are closer to the consumer. As companies have started selling in more global markets, R&D teams can bee spread out through the globe - in China, India, Eastern Europe and more. Service providers on the sales side should be knowledgeable about the products and the differentiators from competing products in the marketplace. On the R&D side, companies want people who are knowledgeable on the technical aspects of the product and can advise on the customer’s sentiments in the area.

2. Manufacturing Goes from Most Outsourced Function to Least. In a major shift, manufacturing went from being the most commonly outsourced function in 2011 (53 percent), 2010 (51 percent) and 2009 (54 percent), to the least cited outsourced function in 2012 (33 percent). 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 percent of companies who are outsourcing, IT (63 percent) and R&D (51 percent) are the top outsourced functions. More CFOs also report outsourcing call centers this year (37 percent vs. 12 percent in 2011).

BDO USA, LLPs viewpoint:While the survey did not look at the reasons behind the shift, we are seeing more of an economic reason to keep jobs close to home. The cost of labor in India and China has risen significantly over the past few years while at the same time, we’re seeing more available workforce in the U.S. and relatively steady wages. Add to that the time differences, travel costs, supply chain concerns and communications issues, and outsourcing for emerging or middle market companies becomes an even less attractive option. In addition, the movement seen in the retail industry, with customers wanting socially responsible manufacturing, may also be a contributing factor. Looking ahead, we expect that over the next 5-10 years, the outsourcing industry will be in a high state of flux. CFOs will likely be shopping for the best deals and best geographies while balancing services and cost.
 

3. India Reemerges as Top Spot for Outsourcing. After declining in popularity from 2008-2011, India now leads the list of countries to which companies are currently outsourcing. In fact, 62 percent of companies outsourcing report that they source services from India, a major increase from 2011 (29 percent). China also remains a top destination, with both Western & Eastern Europe gaining in popularity.