Employers and labor-market experts say the pendulum is swinging (albeit slowly) away from off shoring labor strategies toward a more home grown approach.
According to the experts, U.S. employers are recognizing the limits of shipping work abroad and are now looking to strengthen operations domestically. The reasons for the shift include the increasing need to utilize skill sets specific to the U.S., increased costs of overseas operations and a desire for a more stable workforce - even when using project-based, contingent labor.
Apple Inc, a company well-known for its long history of outsourcing its manufacturing to China, stunned observers recently by announcing that it would manufacture some of its computers in the United States going forward – investing 100 million dollars in the process. Although it’s highly likely that negative PR around Apple’s factories in China influenced the decision, a growing sense of corporate social responsibility (even if induced by consumer pressure) is becoming more common. Even international companies, such as India based HCL Technologies, have increased their U.S. based workforce, due to a desire, they say “to create a more sustainable, socially responsible business model that serves the communities in which they operate”.
The trend to outsource work abroad started in the 1970s with manufacturing moving to lower-wage nations. Within the last decade, a growing number of technology and support services have been shipped to China, India and the Philippines. However, despite companies plans to re-shore jobs back to America, experts say that change will happen gradually and that companies with successful overseas operations are unlikely to withdraw from those markets completely.
As always, cost is key. Findings by The Boston Consulting Group in their report titled “Made in America, Again: Why Manufacturing Will Return To The U.S.” conclude that China’s manufacturing cost advantage over the U.S. is shrinking fast and that within five years, the gap will virtually close for many goods consumed in North America because of factors including rising Chinese wages, plus higher U.S. productivity and shipping costs.
However, it’s likely to be more than just labor savings and corporate social responsibility behind the re-shoring trend. Companies could also be recognizing the value of physical proximity when it comes to their teams. The Intercontinental Hotels Group requires key people on its web development team to work out of its regional headquarters in Atlanta, even though other technology work, such as software testing, takes place abroad. For an increasing number of companies like this, local market knowledge and easy access to company business partners is key. An example of this is the current demand for companies needing to develop mobile device applications on iOS and Android platforms. Right now, U.S. coders are more likely to be familiar with writing apps than their overseas counterparts.
Re-shoring jobs back to America is likely to cause a boom in temporary labor. With companies looking for cost-effective, home-grown help, engaging workers on a project basis is likely to appeal to employers. By utilizing a temporary labor strategy, companies will be able to get the flexibility they crave while getting the local expertise they need. Is contracting or temping ideal for everyone looking for work? No, probably not. Although, according to the American Staffing Association, 66% of employees currently in project-based positions say that the flexibility of the role is important to them with almost a quarter of those surveyed saying that they have no interest in looking for permanent work. Also, those looking for permanent work will have hope – 80% of companies who use project-based temporary staff see it as a great way to try out candidates for permanent positions. Either way, re-shoring jobs – whether temporary or otherwise – can only benefit the U.S. workforce.
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