A recent survey by advisory firm BDO USA revealed that American tech companies are holding back their plans of sending jobs to low-cost offshore destinations. Fortunately for technical support outsourcing firms, they will not largely suffer from the halt.
The report asked 100 technology US CFOs about their outsourcing plans in the near future, and only five confirmed having prospects of moving back office and manufacturing operations to cheaper foreign sites.
This 2014 rate is a dramatic drop from last year’s 16% and 2012’s 20%. Insourcing plans are also on the rise, with 29% of the respondents saying that they consider bringing back a portion of their existing offshored manufacturing operations to the US this year.
Aftab Jamil, BDO partner and head of Technology and Life Sciences, said that a gradual change in businesses’ offshoring attitude and focus has been going on in the last two or three years. “A few years ago, almost every company you talked with was looking to offshore their operations,” he recalled.
What caused the change of attitude towards outsourcing?
CFOs pointed to environmental disasters and continuous economic disruptions when asked about why they are rethinking their offshoring plans. Wages in top overseas manufacturing sites, such as China and Taiwan, rose by 14% in 2012.
“CFOs are trying to look a little more holistically at outsourcing,” Jamil said, adding that businesses nowadays want higher assurance that the money they will save from outsourcing is totally worth the risks they may face.
Other sects unfazed
Technical support outsourcing remains to be a viable business strategy for companies outside the technology and manufacturing sectors. While CFOs are put off by increasing manual labor rates, the voice-based service industries in Asia stay thriving and expanding.
Statistics gathered by Sourcing Line Computer Economics even show that 43% of IT services companies send tech support roles abroad mainly to reduce costs (44%) and gain IT expertise that is unavailable internally (34%). High-cost sites India and China are still the top outsourcing choices, but Southeast Asian industries including the Philippines and Indonesia are climbing ranks after these countries’ currency decline against the US dollar.
