Companies in the U.S. and Europe are set to shift an additional 750,000 jobs in IT, finance and other business services to low-cost regions by 2016, according to The Hackett Group.
However, the report says the overall trend toward offshoring should slow beginning next year, and could cease by 2022 as corporations simply run out of business service jobs that are appropriate to send to lower-cost markets. The eventual drop in offshoring will challenge Western corporations looking to cut their costs, the report said.
Hackett Group Chief Research Officer Michel Janssen noted offshoring will continue to hit the U.S. and Europe hard in the short term. “After the offshoring spike driven by the Great Recession in 2009, the well is clearly beginning to dry up,” he said. “A decade from now the landscape will have fundamentally changed, and the flow of business services jobs to India and other low-cost countries will have ceased.”
The Hackett Group analyzed available data on 4,700 companies with annual revenues of more than $1 billion with headquarters in the U.S. and Europe. By 2016, a total of 2.3 million jobs in finance, IT, procurement and HR will have moved offshore, it predicted. The total represents about one third of all jobs in these areas.
India is the most popular destination for offshoring, with about 40 percent of positions in IT, finance and key business services sent there.