Tech Companies Outsource Just About Everything

[OhioChick]

March 3, 2008, 6:00 am

We wrote recently that businesses may be outsourcing work overseas without even knowing it. But there’s one group that’s keenly aware of how much they outsource: technology companies.

Forty-nine percent of tech companies send work overseas, according to a soon-to-be-released survey of 100 tech CFOs by the consulting firm BDO Seidman. The companies surveyed have revenues ranging from $100 million to $15 billion, so the sample is pretty representative of the entire industry. (It’s also more evidence that this survey claiming only 6% of companies send tech work offshore is off target.)

Of the 49% of tech companies that send work offshore, 51% outsource information-technology services and programming. An additional 49% outsource research and development. When coding jobs started to move offshore en masse five or so years ago, the prevailing wisdom was that businesses would only outsource low-end work like basic programming, and that high-end work, such as R&D, would always stay home. The survey suggests that hasn’t happened. “High-tech companies clearly see outsourcing as a necessary activity,” Lee Duran, a partner in BDO Seidman’s technology practice, tells the Business Technology Blog. It’s inevitable that after successfully outsourcing low-end work, these companies would try to outsource higher-end work as well, he adds.

One hurdle to outsourcing R&D that we’ve heard mentioned in the past is intellectual-property protection. That wasn’t an issue for the CFOs surveyed: Only 14% said they were concerned about overseas workers exploiting their intellectual property, trailing currency risk (26%), uncertain business climates (25%) and training (17%) as outsourcing concerns.

Among the other tasks tech companies send offshore are manufacturing (74%), distribution (45%) and call-center operations (35%). Not surprisingly, India was the top destination for outsourcers (60%), followed by Southeast Asia (50%) and China (46%). Only 19% of companies outsourced to Eastern Europe and Latin America. India (30%) was also the top pick of the companies who were asked if they would like to outsource in the future, followed by China (23%).

http://blogs.wsj.com/biztech/2008/03/03/tech-companies-outsource-just-about-everything/?mod=googlenews_wsj

[Hydra]

1. Color me surprised

At some point, they'll figure a way to outsource policemen.

When there are no actual jobs in America, will people still be talking about the "miracle" of free trade?

[OhioChick]

2. Yep. n/t

[Larkspur]

4. Blackwater has that covered

Just import torturers and mercenaries from foreign countries. New Orleans was a test case scenario for them.

[Hydra]

5. Point

They don't have to be americans to subjugate us- in fact, it works better when they aren't.

[Skittles]

6. even if certain jobs "cannot be outsourced"

they can always import folk who will work on the cheap - if they can do that they will

[OhioChick]

7. They Sure Will

Anything to save a buck.

[ihavenobias]

8. Exactly. Cheap labor is outsourced *and* in-sourced. We're being squeezed at both ends

and in both cases, I blame the people in charge (of our government and the corporations), not the people who are looking for work.

[ihavenobias]

3. K & R

[Canuckistanian]

9. Tell me about it

I've seen SO many jobs outsourced to China and India and elsewhere.

And here's a dirty little secret - it ain't all that profitable sending work out to people who don't have the tehcnical know-how to handle it.