The backlash in the US against outsourcing notwithstanding, the percentage of jobs being offshored now will roughly double in the next three years, according to a global survey by human resources outsourcing and consulting firm Hewitt Associates.
"On an average, 13 per cent of the jobs at each company surveyed relocated recently, and an additional 12 per cent are being considered for relocation within the next three years," the survey says.
Outsourcing and India: Complete Coverage
The survey says the principal beneficiary could be India. "The areas of greatest global sourcing expansion over the next three years will be Eastern Europe and Southeast Asia. The top locations used for global sourcing from the finance group include India (60 per cent), China (36 per cent), Mexico (32 per cent), Canada (15 per cent) and Ireland (14 per cent)," the survey says.
Of the more than 500 senior finance and human resources experts surveyed by Hewitt, 45 per cent said their firms were currently using a global sourcing model or were considering implementing one within the next three years.
"With more than three-fourths of companies indicating that their global sourcing arrangements are permanent, it's clear that global sourcing is a fundamental and permanent change in the way business is conducted," said Mark Arian, corporate restructuring and change practice leader for Hewitt Associates.
"Many companies are choosing to build an infrastructure in their new locations and add services as needed. However, for most companies, the model is still new, so there are challenges, especially in the areas of accurately assessing costs and concerns around talent, that have yet to be addressed, resulting in a low return on investment," he added.
"Of those who are currently sourcing talent globally, 29 per cent began doing so in the years 1995-1999, and 43 per cent began in 2000-2003. Of those who do not currently use an off shoring model, 71 per cent intend to start by 2005," the survey notes.
Although cost reduction is the primary driver (92 per cent) and the leading parameter of gauging success (95 per cent), leaders are often overlooking many people-related costs, it adds.
For example, less than half the companies analyse the tax environments of considered countries, only three-fourths measure the impact on supply chain costs and only 34 per cent assess the cost of plant or office shutdown.
