Workplace Issues

Less Offshoring Won’t Mean More Onshoring

Companies are running out of jobs that can be moved abroad.
Marielle SegarraMay 15, 2012

U.S. and European companies will soon begin to offshore fewer business-services jobs, say researchers at The Hackett Group. But that doesn’t mean more jobs will be brought back onshore.

Those companies will simply start to “run out of jobs that can be moved offshore” by 2016, explains Michel Janssen, chief research officer at Hackett, a global business advisory firm. “There’s a point where you can’t offshore the CFO himself or some of the key staff, and you can’t necessarily move the auditors or any of the client-facing business analysts abroad either.”

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Meanwhile, Hackett predicts that by 2016 there will be about half as many North American and European jobs in finance, human resources, information technology, and procurement as there were in 2002. The job decline is largely due to the increased productivity that followed layoffs during the recession, says Erik Dorr, senior enterprise research director at Hackett.

“Companies took the recession as an opportunity to trim a lot of fat,” says Dorr. “Except they didn’t bring those jobs back when the economic outlook started to look a little bit rosier.”

As companies continue to look for ways to cut payroll, they may begin to offshore jobs in fragments, divvying up responsibilities into higher-cost and lower-cost areas based on the skill sets required, Janssen says. For instance, a company may distribute traditional financial planning and analysis among different regions, assigning report-creation duties to workers in lower-cost locations and leaving staff members in the U.S. to do the analysis for a higher salary, he says.

Hackett predicts that U.S. and European companies will offshore about 750,000 more business-services jobs between now and 2016.