TECHNOLOGY CFOS CHOOSE U.S. AS FUTURE OUTSOURCING LOCATION OVER CHINA AND INDIA, ACCORDING TO BDO SEIDMAN SURVEY
San Francisco, CA – March 3, 2009 – This year, according to the annual survey by BDO Seidman, LLP, one of the nation’s leading accounting and consulting organizations, nearly two-thirds (62%) of chief financial officers (CFOs) at leading U.S. technology businesses say that their companies outsource services or manufacturing. However, the survey results point to a likely decline in international outsourcing in 2009: twenty-two percent say the United States is the outsourcing destination they are most likely to consider in 2009, compared to sixteen percent for China and thirteen percent for India. Another nineteen percent report no interest in additional outsourcing.
“While last year may have produced an outsourcing bubble, 2009 will see companies retrench to survive in the face of reduced demand. The United States has become a far more viable option for them,” said Douglas Sirotta, a Partner in BDO Seidman’s Technology Practice. “This year we are seeing three global factors that are causing U.S. technology companies to pull back from traditional outsourcing locations, led by the recent boom and bust of the worldwide economy. Satyam’s fraud case and the terrorist attacks in Mumbai are causing a lot of companies to reconsider operating in India. And supply chain and shipping cost issues in China are negatively impacting the attractiveness of outsourcing technology operations to the Far East.”
These findings are from the BDO Seidman 2009 Technology Outlook Survey, which examine the opinions of 100 chief financial officers at leading technology companies located throughout the U.S. The survey was conducted in January of 2009.
Other major findings of the 2009 BDO Seidman Technology Outlook Survey:
· Economic Climate Affects International Growth Plans. Less than half (42%) of the CFOs indicate that they have operations outside the U.S., compared to nearly double that amount (79%) last year. Nearly a third (29%) of respondents say their primary concern regarding international growth is an uncertain business or political climate. About a quarter (26%), cite international business and tax regulations, with 21% citing currency risk, 14% intellectual property risk and exploitation, and 10% training of international employees as their primary concern.
· Current Outsourcing – Where? The most common non-U.S. locations for outsourcing are India (50%), Southeast Asia, including the Philippines (31%, down from 50% in 2008), China (19%, down from 46% in 2008), and Western Europe (19%).
· Future Outsourcing – Where? When asked what one location they might consider for outsourcing in the future, the CFOs most frequently cite the United States (22%), followed by China (16%), India (13%), Southeast Asia, including the Philippines (7%), Latin America (7%), Western Europe (6%), Canada (5%) and Eastern Europe (3%).
· Outsourcing – What? Of those outsourcing, the most common functions being off-shored currently are: manufacturing (54%), IT services and programming (46%), research and development (35%), distribution (35%) and call centers (35%).
The BDO Seidman 2009 Technology Outlook Survey is a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm, whose executive interviewers spoke directly to chief financial officers. Market Measurement used a telephone survey performed within a scientifically-developed, pure random sample of U.S. technology companies in the software, hardware, telecommunications, internet and information technology services sub-sectors. The companies in the random sample had revenues up to $30 billion.
BDO Seidman, LLP is a national professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. Guided by core values including, competence, honesty and integrity, professionalism, dedication, responsibility and accountability for almost 100 years, we have provided quality service and leadership through the active involvement of our most experienced and committed professionals.
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