A Growing Appetite for Offshoring
BusinessWeek Telecom Editor Steve Rosenbush is spending the week roaming the halls of CeBIT, the big European tech show that launched in New York on May 25. Here are excerpts from his notebook:
The information-technology sector is at the heart of the debate over outsourcing and offshoring, the growing trend toward moving or contracting out production -- and its associated jobs -- to lower-cost countries.
The trend shows no sign of slowing down, amid rising fears of job losses in the U.S. and politicians' election-year jitters, according to William Martorelli, principal analyst with Forrester Research, who headed a panel at CeBIT sponsored by the Business Council for the U.N. If anything, the movement is accelerating. Forrester's long-term forecast is unchanged at 3.3 million U.S. jobs exported by 2015. But the current number, 540,000, is a bit more than expected.
Martorelli says the trend is irresistable because it's based on fundamental economic interests, not the short-term demands of the recent recession. And it's becoming increasingly global. Until now, much outsourcing has been point-to-point, between the U.S. and India. Now, India is shifitng jobs to other countries such as China, and regions such as Latin America and Eastern Europe are getting into the act.
A representative from the Hungarian Technology Center urged the panel discussion's audience to send business his way. He insisted that Hungary was the best place for innovative and complex outsourcing, having produced the inventors of the ballpoint pen and the hydrogen bomb. Now that should reassure those wags in Congress that everything is O.K.