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Tucson, Arizona | Published: 11.01.2006
CHICAGO — Job losses in the United States from outsourcing, already a touchy political issue, could mushroom in the next decade as companies shift hundreds of thousands more professional white-collar jobs offshore, according to a new study.
Fortune 500 companies could potentially save $58 billion annually, or some $116 million per company, by offshoring general and administrative jobs, according to the Hackett Group, a strategic advisory firm.
Hackett will formally issue the study next week.
The study estimates that increased use of cheaper overseas labor could affect up to 1.47 million back-office jobs over the next decade, or nearly 3,000 at a typical Fortune 500 company. And the jobs under review will go far beyond call centers.
"People have become more confident in the analytical capabilities of the overseas staff, and that is expanding the profile of the kinds of jobs that are under consideration," Wayne Mincey, the Hackett Group's president, told Reuters from Atlanta.
Some of the jobs that can now more readily be shipped overseas than they could several years ago include those in IT, finance, human resources and procurement.
The education base and skill set, and with it the potential savings on labor costs, are on the rise in India, China, the Philippines, Pakistan, Eastern Europe, Brazil and other emerging countries, the Hackett study said.
Sending certain jobs offshore results in typical savings in salaries of about 70 percent, compared to savings of 10 percent to 20 percent by moving jobs to lower-cost U.S. locations, Mincey said.
"Executives have to take a much closer look because the savings are so large … it becomes a competitive issue," he added.
The Hackett study suggested that many companies are relying on outdated analysis to assess the benefits of outsourcing and risk "under-scoping" such initiatives.
But once they get up to speed, it could be "Katie bar the door."
Hackett is a division of Answerthink Inc., a business and technology consulting firm.
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