U.S. Technology Outsourcing to Reach Record Levels in 2013, According to … – EON: Enhanced Online News (press release)

CHICAGO–(BUSINESS WIRE)–Outsourcing in the U.S. technology industry has increased for the first
time in three years, according to data released today by BDO
USA, LLP, a leading accounting and consulting organization. Among
the 100 U.S. technology chief financial officers polled, 63 percent plan
to outsource or manufacture products outside of the U.S. This marks the
highest level of outsourcing by U.S. technology companies since the
inception of the survey in 2008. Interestingly, of the companies who are
not currently outsourcing, 84 percent said they are not likely to do so
this year.

“While the drive to remain competitive has led
technology companies to maintain outsourcing contracts, many are working
in tandem to grow their U.S. workforce to develop new and innovative
products and solutions in the U.S. while outsourcing traditional ‘back
office’ operations.”

Despite the growth in outsourcing, technology executives surveyed also
anticipate growth in the U.S. technology job market in the year ahead.
Overall, 43 percent anticipate the total number of U.S. employees will
increase in 2013, while an additional 45 percent expect their workforce
to remain stable.

“Despite an unemployment rate still hovering near 7.7 percent, the
technology industry is rapidly growing, thanks to new technologies and
trends like big data, mobile applications and cloud-collaboration,” said
Aftab Jamil, partner and director of the Technology
and Life Sciences practice at BDO
USA, LLP. “While the drive to remain competitive has led
technology companies to maintain outsourcing contracts, many are working
in tandem to grow their U.S. workforce to develop new and innovative
products and solutions in the U.S. while outsourcing traditional ‘back
office’ operations.”

Sixty-one percent of CFOS say manufacturing will be, once again, the
most heavily outsourced function for U.S. technology companies despite
recent rises in U.S. manufacturing in other industries. There have been
a few notable examples of technology companies – including Apple, Lenovo
and GE – bringing manufacturing back to the U.S. Southeast Asia
maintains its position as the leading outsourcing destination despite
supply chain interruptions that plagued the region over the past few
years. Following manufacturing, R&D is the second most expected
outsourced function (56 percent) followed by distribution (42 percent)
and IT services and programming (30 percent).

These findings come from the sixth-annual BDO Technology Outlook
Survey, which examined the opinions of 100 chief financial
officers at leading technology companies throughout the United States.
The survey was conducted from December 2012 to January 2013.

Other major findings from the 2013 BDO Technology Outlook Survey
include:

• The U.S. tax environment is not hindering international growth.
  Though technology companies are using outsourcing to gain a
  competitive advantage, 61 percent of U.S. technology executives
  surveyed do not believe that the U.S. tax system is hindering their
  ability to compete in a global marketplace. In fact, domestic tax
  concerns, including corporate tax rates (39 percent) followed by
  taxation of overseas activities (21 percent), are the primary concerns
  related to the U.S. corporate tax reform. However, technology CFOs do
  not believe that a repatriation tax holiday would incentivize them to
  bring outsourced services and operations back to the U.S.: 72 percent
  of executives surveyed said it would not change their plans in 2013.
• China remains top outsourcing destination. China (38
  percent) is still top-of-mind for technology CFOs surveyed, however
  many are condensing the regions to where they outsource. In 2012, CFOs
  reported they were outsourcing to 8 different counties; in 2013, CFOs
  surveyed only noted outsourcing to six countries, excluding Western
  Europe and Latin America in this year’s results. Most outsourcing
  dollars are still directed toward Asia, with India as the second most
  popular destination followed by Eastern Europe and Russia (29 and 16
  percent, respectively).
• Sales and marketing, research and development are key areas for
  employment growth in 2013. As U.S. technology companies
  increase hiring in 2013, sales and marketing (32 percent) and research
  and development (30 percent) are the leading positions employers are
  looking to fill. Manufacturing is also on the rise, with 27 percent of
  CFOs saying they will add the most new positions in that area this
  year.

Material discussed in this release is meant to provide general
information and should not be acted on without professional advice
tailored to your firm’s individual needs.

About BDO Technology and Life Sciences Practice

BDO is a national professional services firm providing assurance, tax,
financial advisory and consulting services to a wide range of publicly
traded and privately held companies. Guided by core values, including
competence, honesty and integrity, professionalism, dedication,
responsibility and accountability for 100 years, we have provided
quality service and leadership through the active involvement of our
most experienced and committed professionals.

BDO works with a wide variety of technology clients, ranging from
multinational Fortune 500 corporations to more entrepreneurial
businesses, on myriad accounting, tax and other financial issues.

About BDO USA

BDO is the brand name for BDO USA, LLP, a U.S. professional services
firm providing assurance, tax, financial advisory and consulting
services to a wide range of publicly traded and privately held
companies. For more than 100 years, BDO has provided quality service
through the active involvement of experienced and committed
professionals. The firm serves clients through 45 offices and more than
400 independent alliance firm locations nationwide. As an independent
Member Firm of BDO International Limited, BDO serves multi-national
clients through a global network of 1,204 offices in 138 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S.
member of BDO International Limited, a UK company limited by guarantee,
and forms part of the international BDO network of independent member
firms. BDO is the brand name for the BDO network and for each of the BDO
Member Firms. For more information please visit: www.bdo.com.