Subscribe to our free, weekly email newsletter!


New research forecasts offshoring of 750,000 more jobs

As noted in Supply Chain Management Review late last year, researchers were trying to determine if levels of additional offshoring in these areas would begin to decline by 2014.
By Patrick Burnson, Executive Editor
March 27, 2012

Corporations in the U.S. and Europe will move an additional 750,000 jobs in IT, finance, and other business services to India and other low-cost geographies by 2016, according to new research from The Hackett Group, Inc.

As noted in Supply Chain Management Review late last year, researchers were trying to determine if levels of additional offshoring in these areas would begin to decline by 2014.

This is indeed their conclusion. Furthermore, in the next 8-10 years the flow of jobs offshore is likely to cease, as companies simply run out of business services jobs suitable for moving to low-cost countries.

The Hackett Group’s offshoring research, which examined available data on 4,700 companies with annual revenue over $1 billion headquartered in the U.S. and Europe, found that by 2016, a total of 2.3 million jobs in finance, IT, procurement, and HR will have moved offshore. This represents about one third of all jobs in these areas. India is by far the most popular destination, with nearly 40 percent of the jobs being offshored headed there.

But The Hackett Group’s research sees additional offshoring levels in business services, which are currently at around 150,000 new jobs each year, leveling off or declining after 2014. The Hackett Group’s research also found that of the 5.1 million business services jobs remaining onshore at U.S. and European companies in 2012, only about 1.8 million have the potential to be moved offshore, with 750,000 of those moving by 2016. So by the end of the next 8-10 years, the traditional model of lifting and shifting work out of Western economies into low cost geographies will cease to be major factor driving business services job losses in the U.S. and European.

Hackett’s research also found that automation and other productivity improvements are another major factor driving job losses in business services at U.S. and European companies. Automation and other productivity improvements will have caused the elimination of 2.2 million business services jobs at these companies between 2006 and 2016, and these factors are currently driving the elimination of around 200,000 jobs annually.

“In the U.S. and Europe, offshoring of business services and the rapid transformation of shared services into Global Business Services, have had a significant negative impact on the jobs outlook for nearly a decade,” said The Hackett Group Chief Research Officer Michel Janssen. “That trend is going to continue to hit us hard in the short-term. But after the offshoring spike driven by the Great Recession in 2009, the well is clearly beginning to dry up. A decade from now the landscape will have fundamentally changed, and the flow of business services jobs to India and other low-cost countries will have ceased.”

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Getting items ordered online to your home on a same-day basis is as important or relevant as it needs to be, and it depends on things like the type of products being ordered and its relative urgency as well. This was put into better perspective for me during a recent conversation I had with Dr. Victor Allis, CEO of Quintiq, a supply chain vendor specializing in a single optimization and planning platform.

Diesel prices dropped for the third straight week, with the average price per gallon seeing a 2.5 percent decline to $3.869 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

Seasonally-adjusted (SA) for-hire truck tonnage in June dropped 0.8 percent on the heels of a revised 0.9 percent (from 1.0 percent) increase in May and was up 2.3 percent annually.

Even as Congress was putting the finishing touches on a 10-month short-term funding extension to the federal aid highway bill that temporarily averts a funding crisis, Transportation Secretary Anthony Foxx was ripping the measure as a short-term “gimmick” that once again fails to adequately fund U.S. infrastructure needs in the long run.

ISI is comprised of Integrated Services, ISI Logistics and ISI Logistics South and is focused on the warehousing and transportation needs of automotive shippers. RRTS said that in 2013, Integrated Services generated revenues of approximately $21 million adding that Integrated Services is expected to be accretive to Roadrunner’s earnings in 2014.

Article Topics

News · Global · Global Trade · Trade · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA