Business Facilities - December 2007 - (Page 48)

FEATURE STORY Trends in Offshoring Vives, XMG president and chief analyst. “The Philippines is experiencing an unprecedented growth rate of 62% CAGR (compound annual growth rate) and will surpass Malaysia in 2007.” It’s a complex formula that determines whether offshoring will work for a given company. Time and money savings are obvious, but not guaranteed benefits. But other factors, such as quality control and communication challenges, have kept some firms leery of offshoring. And as the “globalization” of business strategies has progressed in recent years, so have its costs— wages, real estate prices, and infrastructure have become more costly in some of the more prominent off- India’s high rate of turnover, and competition for quality employees. Indeed, some companies are not buying into the offshoring practice. Despite the highly publicized advantages in cost savings and other areas, some corporate executives are bucking the trend by staying home and expanding in rural America. Atlanta-based Xpanxion, a global software engineering company and an early adopter of combining U.S. and Indian centers for outsourcing operations, moved its software testing and quality assurance operations from Pune, India, to Kearney, NE last year. The company, which still maintains some operations in Pune, refers to its business model as “crosssourcing,” a combination of offshore, onshore, and local outsourcing. The company Total Number and Percentage of U.S. Jobs Moving Offshore, 2003-2015* believes that having multiple 3.5 (6.0%) geographic locations reduces 3.5 risks and gives clients more cost-efficient services and real-time support. 1.7 (3.1%) Millions 1.75 1.2 (2.2%) Accenture—the global of jobs 1.0 (1.7%) 1.1 (1.9%) 0.8 (1.5%) management consulting, 0.5 (.9%) 0.3 (0.6%) technology services, and out0 sourcing company—recently 2003 2004 2005 2006 2007 2008 2010 2015 signed a five-year agreement with the Confederated Tribes of the Umatilla Indian ReserTotal Wages Associated With U.S. Jobs Moving Offshore, 2003-2015 vation, near Pendleton, OR, $151.2 to help manage Cayuse Tech150 nologies, LLC, a newly formed American Indian 100 $75.4 enterprise. Cayuse TechnoloUS$ billions $50.8 $48.2 gies will provide U.S. compa$42.4 $36.7 50 nies with services including $23.3 $19.7 software development, call 0 centers, and image and docu2003 2004 2005 2006 2007 2008 2010 2015 ment processing. *Represents percentage of jobs moving offshore in the following categories: management, business, computer, architecture, life sciences, legal, art/design, sales, and office “We’re responding to the tremendous demand among Accenture clients for shoring locations. A study by McKinsey Global Institute and Nasscom, India’s software industry association, showed that entry-level wages rose 13% per year between 2000 and 2004, and mid-level managers’ salaries climbed 30% annually during that time. Wages in India and the Philippines continue to rise by 11% and 8%, respectively, XMG reports. Last year, Apple Inc. withdrew its plans to build a captive center in India that was expected to employ 3,000 workers. While Apple did not publicly discuss its reasons for the decision, Business Week reported it was likely cost-driven, with wages for software engineers and IT managers soaring. Other factors may have included SOURCE: BUREAU OF LABOR STATISTICS AND FORRESTER RESEARCH, INC. Source: Bureau of Labor Statistics and Forrester Research, Inc. 48 DECEMBER 2007

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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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