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Tag >> outsourcing
Tech companies are souring on outsourcing.
According to a survey of 100 chief financial officers at technology companies by BDO USA, LLP, just 35 percent said they are currently outsourcing services or manufacturing to companies outside of the US. This represents a 43 percent decrease from the 2009 high when 62 percent of companies were outsourcing and a slight decline from 2010 (37 percent).
Finance and accounting outsourcing is surging once again.
Annual contract value (ACV) for this specialized category of outsourcing is expected to grow by 15 percent to 20 percent this year, to more than $4 billion, according to the Everest Group.
This growth comes on the heels of a 15 percent increase in 2010, suggesting the market is surging once again.
In 2008 and 2009, ACV growth was closer to 10 percent, reflecting the weaker overall economy.
Looks like the Indian outsourcing industry is up against a growing threat: the Philippines. Thanks to an aggressive and systematically planned push by the government, that country has become a more significant force in the call center market.
Of course, a population of well-educated English speakers also helps.
Companies worldwide are struggling to come to grips with risks and disruptions in their supply chain, according to a survey by the Business Continuity Institute, which found that more than 70 percent of companies had a supply chain breakdown in the past year.
In addition, a significant piece of that disruption arose from outsourced IT and manufacturing processes – and the risk of supply chain disruption related to outsourcing is rising.
Outsourcing part or all of the trade finance function—and the supply chain—can provide great reward to the average corporate. Most big banks, along with many smaller service providers and trade-related market players, offer such services for corporates.
Companies are increasingly looking to hand off the parts of this function that are not essentially held in-house.
One big outcome of the crisis is that most finance and treasury teams at any and every size of business now work many more hours than they did before, and wear many different hats than they used to.
With so much focus on improving working capital management and reducing costs in the working capital chain, this put increasing pressure on the CFO and their finance team to build up additional skill sets that may or may not have had anything to do with their previous job function.
Outsourcing to India might just become a thing of the past. Who needs to outsource when it's just about as cheap to keep the work in the USA?
Wage costs are on the rise in China and India, spurring companies like GE to relocate some operations back in the US, something my colleague Nick Lord recently discussed. And of course, the employment rate in this country has been skirting 10 percent for a while.
Posted by Ron F in recovery, recession, outsourcing, offshore, joblessness, global economy, employment growth, employment, emerging markets, economy, earnings, demand, cutting costs, corporations
Paul Krugman today once again bemoans the lack of Keynesianism in what passes for economic policymaking discussions these days, and I share that complaint.
However, Krugman may be missing part of the problem here, which is that those who pooh-pooh the prospect of deflation may actually not much care if it materializes, though they would be mistaken to do so.
Given the time and resources needed to manage complex treasury and finance systems, companies are increasingly choosing to have outside vendors manage their treasury software systems. But outsourcing management of treasury or finance systems comes with a unique set of risks that vendors are often hesitant to share with clients.
In a survey last year, consultancy Aite Group found that 66 percent of new treasury management system purchases made by companies were for vendor-hosted systems--where the software vendor, or a third party, manages the software on an outsourced basis, rather than the company managing the software in-house.
Posted by Ron F in workers, outsourcing, offshore, Malaysia, emerging markets, economy, earnings, demand, costs, cost reduction, cost cutting, consumer spending, China, Careers/Management
Rising labor strife in China has potentially significant implications for US companies and financial markets. The irony is that what companies want isn't necessarily the same thing that markets do.
Yves Smith over at Naked Capitalism does a good job of explaining why.
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