March 4, 2009

Outsourcing faces a stay-at-home year

U.S. technology corporations are rethinking their strategies for outsourcing jobs to foreign countries, a survey indicates.

Twenty-two percent of the respondents to the BDO Seidman 2009 Technology Outlook Survey indicated they were more likely under current conditions to consider outsourcing to locations within the United States, compared to 16 percent considering China and 13 percent considering India.

Seven percent indicated Southeast Asia would be their first pick for outsourcing.

Nineteen percent of the respondents indicated their outsourcing was unlikely to grow this year.

While last year may have produced an outsourcing bubble, 2009 will see companies retrench to survive in the face of reduced demand, Douglas Sirotta, a partner in BDO Seidman's Technology Practice.

The United States has become a far more viable option for them, he said.

Sirotta said the recent boom and bust of the global economy was the primary reason firms were reconsidering outsourcing strategies. In addition, a massive fraud case in India at Satyam Computer Services and terrorist attacks in Mumbai have given companies pause.

And supply chain and shipping cost issues in China are negatively impacting the attractiveness of outsourcing technology operations to the Far East, he said.