A recent survey by BDO Seidman, LLP, one of America's leading accounting and consulting organizations, has revealed that the traditional outsourcing destinations of India and China may have lost their sheen and 2009 will see a surge in jobs outsourced within the US.

The key reasons for this dramatic shift are: the global economy in a recession; Satyam’s fraud case coupled with the Mumbai attacks and; supply chain and shipping cost issues in China.

As many as two-thirds of chief financial officers at technology businesses survey said that they would outsource services or manufacturing this year, but a large number would prefer to outsource in the US rather than abroad. While 22% stated that they would prefer to outsource in the US in 2009, only 16% chose to move work to India and China.

'While last year may have produced an outsourcing bubble, 2009 will see companies retrench to survive in the face of reduced demand. The US has become a far more viable option for them,' said Douglas Sirotta, a Partner in BDO Seidman's Technology Practice.
'Satyam's fraud case and the terrorist attacks in Mumbai are causing a lot of companies to reconsider operating in India. And supply chain and shipping cost issues in China are negatively impacting the attractiveness of outsourcing technology operations to the Far East.'

Other key findings of the survey include:

-- Less than half (42%) of the CFOs indicate that they have operations outside the US. This figure stood at 79% lat year

-- Nearly a third (29%) of respondents say their primary concern regarding international growth is an uncertain business or political climate.

-- 26% cite international business and tax regulations as key concerns; 21% cited currency risk; 14% intellectual property risk and exploitation and; !0% cited training of international employees as their primary concern.

-- The most common non-US locations for outsourcing are India (50%), Southeast Asia, including the Philippines (31%, down from 50% in 2008), China (19%, down from 46% in 2008), and Western Europe (19%).

-- For future outsourcing, the CFOs most preferred the US (22%), followed by China (16%), India (13%), Southeast Asia, including the Philippines (7%), Latin America (7%), Western Europe (6%), Canada (5%) and Eastern Europe (3%).

-- Of those outsourcing, the most common functions being off-shored currently are: manufacturing (54%), IT services and programming (46%), research and development (35%), distribution (35%) and call centres (35%).