Cost savings through competitive prices and better work skills than at home are the driving factors behind the majority of US companies' decision to outsource, according to a survey by Columbia University.
As many as 45 companies known for sending work outside their own companies for completion showed that 82 per cent were currently outsourcing jobs, 79 per cent to offshore businesses, and the majority not only report finding competitive prices but better work skills than at home.
Seventy per cent of the companies, which outsourced reported that the quality of outsourced business processes had increased between 5-25 per cent.
The survey was carried out by Earth Institute at Columbia University.
"This is an enormously important phenomenon which needs to be better understood," Jeffrey Sachs, director, Earth Institute said.
Companies including GE, Nortel Networks, and Citibank have found that actual cost savings which remain the primary reason for outsourcing were achieved by 67 per cent of the companies to the tune of 5-50 per cent, the survey said.
Lower-end jobs in US will continue to be eliminated either due to offshoring or better technology and that physical proximity to the main business is not a factor, it said.
"The main downside to outsourcing perceived by American businesses is loss of institutional knowledge, data security, loss of intellectual property rights and political risks," Harpreet Khurana, co-author of the survey said.
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