With a near 30% share in global economy, the US economy is single the most important economy for the global outsourcing industry. How things shape up there, and how the impact of outsourcing in perceived by different stakeholders there is therefore crucial to the acceptance and survival of outsourcing industry and its future growth.
US Economy and the Outsourcing Industry
There is very little international economic activity in the world that does not get affected by changes in US economy. Global outsourcing is also no exception to this rule. The current developments taking place in US economy can make significant impact onthe future of outsourcing industry.
One major development taking place right now is the rising unemployment. As more people look out for jobs within the economy, the pressure on the Obama Government to restrict outsourcing will grow. However, one must also remember that unemployment rate is not exactly a reflection of desperation for any kind of jobs. Many a times, part of the unemployment is transitional in nature, resulting from a high rate of attrition and changeovers. It is too early to say as to whether the current rise in unemployment in United States is a reflection of volatile times or a signal of prolonged recession.
Another simultaneous development is the falling profit margins of the companies, which puts a lot of pressure on the management to find ways and means of cutting costs and preserving and sustaining profits. One of the most popular means for this end is outsourcing of none-core activities to offshore centers. The growing sense of doom in the economy may actually
These two major developments in the US economy are likely to cause opposing impacts on the global outsourcing. Which of the two dominates will depend on whether the political or the economical rationale prevails. If the recessionary trends sustain for a while and there is further rise of unemployment statistics, one may see measures to disincentivize outsourcing. How far it will be effective will largely depend upon whether the monetary disincentive is strong enough for the companies to give away the benefits of outsourcing. Thus, in the short run, it is difficult to say whether the impact of current developments on global outsourcing will be positive or negative.
The Long Term Impacts of Outsourcing Industry
In the long run, the outsourcing industry is likely to benefit. As the businesses compete with each other for survival, they are unlikely to overlook any opportunities for cutting costs, and it is here that the pressure from the shareholders on the managers will probably far outweigh other factors. In the long run, outsourcing is likely to create more jobs than it will consume. The fact that most economists and business analysts accept this phenomenon will facilitate business enterprises in taking advantage of this opportunity.
Global outsourcing industry will certainly be affected by the recent developments in the US economy. However, in a few years time, it is likely to emerge stronger.