Is the Outsourcing Boom Over?

While there are talks suggesting that the outsourcing boom is losing ground in India, outsourcing trends are forecasting that China is going to be a major outsourcing target over the next few years. According to the IDC, outsourcing in China is growing approximately 30% each year. In the mean time, the government of China is implementing a project to establish 20 cities as hubs for outsourcing. This means that not only is outsourcing going to continue, but it is also ready to grow.

One of the biggest areas of outsourcing is the software industry and IT services, which have mainly been outsourced to India. Now China is becoming a similar, if not competitive, base for outsourcing. As China continues to develop its outsourcing services, it is going to become a major challenge to India, which is currently the dominant center for outsourcing. In fact, American companies have recently gone overseas to Beijing to discuss with officials from the Ministry of Commerce about some effective ways to outsource to China.

China trends related to this issue have been changing in the recent past. Before, China would receive orders from companies in India where as now they are receiving orders directly from both the United States and Europe.

The financial crisis that is looming across the globe is a major contribution to such outsourcing trends. In general, during a financial crisis, companies begin to make plans to outsource to a third party in order to lower costs or use their time more efficiently. When the economy is dwindling, more and more companies seek other avenues of increasing productivity along with being more efficient and resourceful.

One of the first industries to get transferred over is the information technology (IT) sector. This also opens up whole new employment opportunities for the outsource providers. While some people suggest that companies will cut their overall IT costs and therefore hold back on outsourcing, studies show that very few companies will actually reduce their budgets. In other words, outsourcing is not going to end any time soon.

Experts on this topic are professing that a globalized market will allow more outsource providers to come in to play as sources of out of country labor. This will cause smaller and developing countries to grasp on to the outsourcing trend instead of just the big countries including India, Brazil, Russia and of course China. Although this may seem to be a challenge, it could be seen as another means of creating more competition. This will allow a big and powerful country like China to dominate the outsourcing market.

The overall outlook on outsourcing is a positive and optimistic one, especially because the state of the global economy continues to fluctuate. Outsourcing not only helps companies save money and be more productive, it also allows outsource providers to generate revenue and create more jobs. People will also have the opportunity to seek further training to overcome language barriers and obtain new skills to bring a more secure and promising system of transfer.

 
 

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