Business Facilities - December 2007 - (Page 46)

FEATURE STORY By Brian Donahue Long gone are the days of offshoring being a matter of just dollars and cents. Here’s a look at some of the latest trends driving the continued growth of this phenomenon. O ffshoring, the process of moving business functions to another country (either keeping them inhouse or using a third-party vendor), is often seen as necessary for large and midsize U.S. corporations to compete in the global marketplace today. Competitive pressure upon operating costs and product-tomarket release times have forced thousands of companies to look for cheaper labor pools in countries such as India, China, and Russia. Once primarily associated with manufacturing, offshoring now affects a variety of industries and functions. Booz Allen Hamilton, a global strategy and technology consulting firm, reports that engineering, design, and research are increasingly being performed outside companies’ home countries. Driven by the growing demand for more complicated consumer and industrial products and a shortage of skilled high-tech workers in the DECEMBER 2007 “ Driven by flat budgets and an increase in end user-sponsored projects, CIOs see offshoring as a way of doing more with less. —John C. McCarthy, Analyst, Forrester Research Inc. ” West, the offshoring of these services is expected to continue at a rapid pace. More than one million U.S. jobs have already been moved offshore, and that figure is projected to jump to 3.3 million by 2015, according to Forrester Research Inc. By then, nearly 6% of today’s U.S. jobs will be moved overseas, the firm reports in its study, “Near-Term Growth of Offshoring Accelerating.” The report notes that while greater communication capability via the Inter- net was the initial driver of the offshoring trend, other more recent factors have fueled the movement. For one thing, even conservative companies are now willing to experiment with going offshore to protect themselves competitively. Also, overseas vendors have broadened their IT service offerings, and in many cases user companies are establishing “captive,” or self-owned centers, giving them greater control over their operations. “Driven by flat budgets and an increase in end user-sponsored projects, CIOs see offshoring as a way of doing more with less,” analyst John C. McCarthy writes in Forrester’s report. “Instead of squelching activity, the increased press and savings have spurred senior executives to ask, ‘What is our offshore strategy?’” Offshoring is even beating previous market expectations, according to the research firm XMG, whose latest study estimates the global outsourcing market will hit $297 billion 46

Table of Contents Feed for the Digital Edition of Business Facilities - December 2007

Business Facilities - December 2007 Contents First Word Snapshots Metro Spotlight: Albuquerque, New Mexico Corporate Moves: North Carolina 2007 Ecomonic Development Deal of the Year Awards State of the Year Seeking Supply Chain Solutions Mississippi Means Business Corporate Moves: South Carolina Biomedical Momentum in Florida's High Tech Corridor Trends in Offshoring Metro Spotlight: Stillwater, OK Metro Spotlight: Atlanta, GA Advertiser Information 2007 Salary Survey

Business Facilities - December 2007

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