Washington, Jan 24: Amidst the furore over outsourcing of jobs to countries like India, a study has said that offshoring industry in the US is still in its nascent stage and is expected to grow 31 to 40 per cent annually in the next five years.

The McKinsey global institute said that business-process offshoring, which was valued between USD 32 to 35 billion in 2002, was just one per cent of the USD 3 trillion worth business functions that could be performed remotely.
Due to the significant benefits already being realized through offshoring, the market is projected to grow by 31 to 40 per cent annually, it said, adding that this may cause consternation over job losses but will make it an industry with well over USD 100 billion in annual revenue by 2008.
The study found that companies are leaving behind billions of dollars in savings when they offshore back-office functions and service jobs. They merely replicate what they do at home, where labour is expensive and capital is relatively cheap, in countries in which the reverse is true.
The way to reduce the cost of offshore operations even further, it said, is to re-organize and re-engineer operations to take full advantage of these differences. In a low-wage country, the capital infrastructure, including office space, telecommunications lines and computer hardware and software, should be used as intensively as possible.
Bureau Report