Outsourcing offers less economic value: One-third CEOs worldwide

At a time when the Obama administration is coming down heavily on companies shipping jobs overseas, a survey shows that one-third of the CEOs worldwide believe outsourcing offers less economic value than five years ago.

Moreover, the chiefs at American firms find outsourcing less attractive than their counterparts in non-US-based entities.

"One-third of CEOs believe outsourcing offers less economic value than five years ago," the survey conducted by leading bourse NYSE Euronext.

The 'CEO Report 2010' showed that chiefs of non-based companies find outsourcing more attractive than those of US businesses.

Spread across 23 industries and 24 countries, a total of 284 CEOs participated in the survey.

Regarding the economic value of outsourcing, 45 per cent of the respondents felt that it remains the same as compared to earlier whereas only 22 per cent believed that such a move is economically more attractive.

Interestingly, the percentage of outsourcing has little changed in the last two years, the report said.

India is one of the most favoured outsourcing destinations in the world mainly on account of low cost and skilled manpower.

The Obama administration has restricted the hiring of H-1B visa-holders by companies bailed out by the Federal government and recently announced a plan to end tax incentives for American entities generating jobs overseas.

Both moves are expected to impact the Indian IT sector, whose major chunk of revenues come from the US.

When asked about plans to maximise the opportunity in emerging markets, 21 per cent of the participants said they are seeking and or expanding local partnerships, including outsourcing arrangements.

About 46 per cent of the chiefs noted that they are looking at establishing and or expanding local marketing, sales activity.

"Larger companies as well as those outsourcing companies, involved in manufacturing/construction and business/information services are most likely to have used outsourcing," the report noted.

Of that total, 195 responses were from the US; 48 from Europe and the UK; 12 from Latin America; nine from the Asia-Pacific region; and 18 from Canada and Bermuda, among others.

Independent market research and consulting firm Opinion Research Corp conducted the survey through the internet, phone and mail from March 5 to April 13, 2009.

Meanwhile, the latest report by A T Kearney's Global Services said that India, China and Malaysia are among the most favoured outsourcing destinations in the world.