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Technology Firm Outsourcing Hits Record High

Written by Ken Gaebler
Published: 3/27/2013

New study shows that nearly two out of three tech firms plan to outsource or manufacture outside the U.S. in 2013.

The technology industry continues to be a strong player in the U.S. economy. But a new study by the consulting organization BDO USA shows that industry outsourcing is on track to hit a record high in 2013.

Technology Firm Outsourcing Trend

According to the study, 63 percent of technology firms CFOs report that their companies will outsource or manufacture products outside the U.S. this year--the highest level of outsourcing since the study began in 2008.

The majority of CFOs (61%) also report that manufacturing will be a focus for outsourcing this year and in the foreseeable future. Research and development is expected to be the second most commonly outsourced activity (56%), followed by distribution (42%) and IT (30%).

"Despite an unemployment rate still hovering near 7.7 percent, the technology industry is rapidly growing, thanks to new technologies and trends like big data, mobile applications and cloud-collaboration," said Aftab Jamil, partner and director of the Technology and Life Sciences practice at BDO USA. "While the drive to remain competitive has led technology companies to maintain outsourcing contracts, many are working in tandem to grow their U.S. workforce to develop new and innovative products and solutions in the U.S. while outsourcing traditional 'back office' operations."

Despite several perceived advantages of outsourcing, 84 percent of the technology companies that are not currently outsourcing indicated that they have no plans to begin outsourcing this year. Other findings from the study include:

  • China is the top outsourcing destination, followed by India, Eastern Europe and Russia.
  • 72 percent of CFOs said that modifications to the U.S. tax system would not offer enough incentives to change their plans to outsource in 2013.
  • U.S. tech hiring in 2013 will focus on sales and marketing, research and development, and manufacturing positions.

For more information about the study, visit the BDO website.

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