750,000 jobs move to offshore destinations: Hackett Research Group

Hackett Group Inc, a leading business advisory and operations improvement consulting firm forecast that about 750,000 and more jobs will move to offshore destinations. According to the research group, companies in US and Europe will move jobs in finance, IT and other functions moved to offshore destinations such as India by 2016. However, the research report also forecasts that there will be decrease in the level of offshoring in these areas by 2014. This is because companies will face shortage of business services that can be moved out to offshore destinations.

Job fair, image source http://www.theepochtimes.com

The research report was published after examining the data available from 4700 companies in US and Europe. According to the data available, a total of 2.3 million jobs will be moved to offshore destinations by the way of outsourcing business process to low-cost markets. The number represents almost one-third of jobs in the key business service areas. Out of this, about 40% jobs would be moved to India as it is the most popular offshore destination so far.

Key findings of the research:

  • Level of offshoring will decline by 2014 and will cease by the end of 2020.
  • In next 8-10 years, moving jobs to offshore location will not be a cause of job loss in US and European regions.
  • Out of 5.1 million jobs left in US and Europe only 1.8 million are suitable to be moved to offshore destinations.
  • Out of 1.8 million jobs, 750,000 jobs will be moved by 2016.
  • Automation of process in US and European companies is one another factor that is driving job losses in US and European regions. Recently IBM was in the news for replacing humans with advance technologies in their outsourcing services to improve their profit margin.
  • About 2.2 million outsourcing service jobs will be eliminated by way of automation and improvement process by the companies headquartered in US and Europe by the end of 2016.
  •  Currently automation processes in companies are eliminating 200,000 jobs annually in US and Europe.
  • Companies are going for end-to-end process improvements in order to streamline the process of their service delivery.

The statistics presented by Hackett research group have been backed by many researches. According to Global TPI index published by ISG for the second quarter, even though total value of contracts awarded in outsourcing industry has increased, there has been a steady decline in the number of contracts awarded.  This clearly implies that there is decrease in the number of businesses moved to offshore destinations.

Further the report also states two main factors that drive the offshore demand:

  1.  The consolidation of business delivery services by companies into global business services organization (GBS) to meet the global demand.
  2. Globalization of business operations and the necessity to reduce cost.

You can get more details on the report

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