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U.S. companies are expanding offshoring efforts, study shows

Duke report shows offshoring to increase

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By Local Tech Wire

DURHAM, N.C. – U.S. workers concerned about seeing their jobs offshored have good reason to be concerned the odds of that are increasing, based on a new study from Duke University and The Conference Board.

Not only are more companies implementing offshoring jobs, they also are sending offshore research and development, not just manufacturing, according to the fifth annual report from the Duke Offshoring Research Network. The network is part of the Fuqua School of Business at Duke.

Full details of the report weren’t released Monday. However, a press release lays out numerous key findings by Duke and the Conference Board, which is best known for tracking consumer confidence and other business trends in the U.S.

Findings include:

• 60 percent of companies already offshoring have “aggressive plans” to expand those efforts

• More than 50 percent of companies surveyed had a corporate offshoring strategy in place in 2008, up 22 percent from 2005

• The raw number of companies offshoring more than doubled between 2005 and 2008

• Few of those firms have plans to bring jobs back to the U.S.

• Offshoring of innovation is “continuing at an increased rate in all areas of industry”

• Key drives of that trend include “speed to market and the domestic shortage of science and engineering talent”

• Most offshoring and outsourcing projects launched in 2007 involved product and software development

It’s not just large companies moving jobs offshore. Many small and midsized companies also are “sourcing innovation offshore,” citing as a major reason the difficulty in competing “for highly qualified talent domestically.”

Smaller firms are “accessing new geographical talent clusters” beyond China, India and Eastern Europe to include Brazil, Egypt, Sri Lanka and Russia.

Benefits from offshoring efforts that are corporate wide include cost savings, meeting target service levels, and improving relations with providers, according to Tom Heijmen of The Conference Board and one of the report’s authors.

"Outsourcing innovation in engineering, research and development, product and software development, and knowledge processes makes companies, whatever their country of origin, more competitive by increasing speed to market and compensating for domestic talent gaps," Heijmen said.

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