Can IT Outsourcing Come Back to the U.S.?
For over two decades, sourcing for services across both IT and Business Process sectors has gone global, with services providers from various countries offering a multitude of competencies. The globalization of service delivery has caused vigorous debate as industry, government, and the media have discussed its impact on the U.S. economy.
In response to this, and, changes in cost structures due to the current economy, many IT services providers have been reconsidering U.S. locations as potential sourcing destinations, including lower cost, mid-sized metropolitan areas and rural communities. TechAmerica Foundation’s new report, Low Cost Domestic Sourcing: A Guide To Location Selection, provides a framework to help government agencies and private companies work through the evaluation process.
“In today’s economic climate, everyone must find ways to work smarter, and in a more efficient manner,” said Jeff Lande, executive vice president, TechAmerica. “Companies, governments and others need the best talent at affordable rates, and many enterprises have moved to a global delivery model to innovate and execute on a 24/7 cycle. Since some of the best resources are right next door, increased attention is being given to sourcing to lower cost, domestic regions as part of an enterprise’s overall strategy.”
In order for organizations to evaluate the costs and benefits of setting up a low cost domestic sourcing location, the report provides framework which consists of five major criteria: Workforce; Quality of Life; Cost of Doing Business; Business and Political Environment; and Future Revenue Potential. This framework was developed from research conducted in a paper sponsored by ITAA in 2006, Lower Cost Domestic Sourcing: A Niche Opportunity for the U.S.
Many companies have found that low cost domestic sourcing can offer a key solution, complement global strategies, and help both U.S. and foreign firms expand their reach in the U.S.
“It is important to note that when companies are evaluating domestic locations they are doing so in the context of a global environment,” continued Lande. “Some companies will be looking for a low cost domestic location as an alternative to an offshore location, while others will be looking for a domestic location to complement their global strategy. Foreign-based companies may be looking at a U.S. destination to build local capacity, expand services and gain market access. No matter the reason, the framework and model described in this report can be utilized.”
The report was conducted for TechAmerica Foundation by Ahilia, a California based management consulting firm solely focused on the global services industry. For a free PDF of the executive summary, click this link.