Reversing trend of outsourcing

For years the companies has flourished in their business where outsourcing was one of the major source of saving money and still getting good work done.

One of the main reason why India become the major hub for outsourcing was because of it’s immense pool of skilled science graduate which were far cheaper than in US and Europe.

Although in the last decade the salaries in India has risen manifolds but it still remaines the main destination for outsourcing simply because there is no shortage of the skilled techies.

But the current economic climate is changing the whole dynamics and the early signs are for what they call Outsourcing may be coming home.

With the rising unemployment in US and Europe and with so many people are desperate for the jobs all of a sudden companies see the pool of workers who are ready for work in far less then they were may be five years ago.

Remember no body wants to outsource if only they can get the work done at home.
In the current market situation there is a need to cut costs and increase productivity and for that reason some tech companies are looking for a new approach that bypasses traditional overseas locations like India.

One company who has taken a lead in this is IBM who is focussing on two U.S. communities which are East Lansing, Mich., and Dubuque, Iowa. This could be a trend setting move which other could follow very soon.

IBM believes that in these places there is access to skills also there is a willingness of local universities to cooperate with their business endeavours, and some government incentives to make it economically worthwhile. IBM hopes to create 1,500 direct and indirect jobs in five yearsin East Lansing, Mich and 1,300 jobs in Dubuque, Iowa.

Dubuque didn't just open the door and invite IBM into town but they also offered Big Blue (IBM) an enticing package of incentives worth $55 million over 10 years. These include a loan of $11.7 million that will be forgiven if IBM fulfils its hiring pledge. A local development agency also will spend $25 million to rehab an historic former department store.

Another major factor which is contributing towards bringing the jobs back to US from India is the stimulus package considered by the new president Obama. Although it has not been passed yet by the Congress, Obama has repeatedly discussed IT spending together with the rebuilding the US’s crumbling roads, bridges and schools.

I remember back in early 90’s when India opened its economy to go global one of the first companies to make use of the cheap and skilled science graduate was IBM.
For years India has been the primary location for technology outsourcing not only for IBM but other major tech companies as well.

This all seems to be changing now and the cycle seems to reversing.

It’s not only US but the Europe as well, which is going to get benefited by this reverse in trend. One of the astonishing thing which I came across just last week is that the Japanese companies who has R&D centres in UK are now considered as a cheaper options as compared to the ones in Japan. With the value of British pound fallen so much in the last six months the work force in UK all of a sudden becomes cheaper.

Could this be a new trend?

Industry analysts expect more tech services companies to establish operations in low-cost parts of the U.S and Europe.

I believe that in the coming months and years you'll see more of this although it might not be huge, but it will be a nice niche.