Business Predictions for 2009, Part 1
Small-business experts have speculated that in a recession, more business will outsource work they used to do in-house. That creates new opportunities for smaller companies. I've agreed with this prediction--so much that "outsourcing manager" is one of US News' hot small businesses to start.
But according to outsourcing-advistory company TPI, the number of outsourcing contracts was down in the third quarter of 2008--way down. In fact, it was the worst quarter in six years for outsourcing contracts.
A Wall Street Journal article reporting these numbers interviews one manager of an outsourcing company about another possible trend:
Mr. Harrison says that his customers have historically been an even mix of large, midsize and small businesses. But over the past six months the mix has changed. Fewer small companies are outsourcing work, but more large ones are.
I think there is still reason to believe that outsourcing could have a turnaround in 2009. As University of Michigan business professor Robert Kennedy says in the article, businesses have been putting major changes--like whether or not to outsource--on hold due to the uncertain economy. Well, in the third quarter of 2008, there were still people disagreeing that the economy was even in a recession at all. That's one uncertainty that has now vanished. Heads of larger businesses now know we are in a recession that may get worse before it gets better, so I think cost-saving measures like outsourcing may be in order.
Also, keep in mind that the TPI study only looked at large deals worth more than $25 million. Mid-size companies that don't have that kind of money still might be shedding off in-house services to companies that can do them cheaper.
If you're looking to start a business, keep your eye on these trends.
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OutSourcing
Why are we allowing jobs to leave the US? Most other countries prohibit hiring non-residents.
While opportunities for IT professionals in Europe(may as well read, "US") are scarce, XXX announced plans last month to double the number of employees in Brazil to 8,000 by the end of next year. The company also plans to add about 14,000 programmers in India, where it currently employs nearly 40,000 workers, according to Communications Workers of America.
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Even as XXX (NYSE: XXX) completes plans to lay off 14,500 workers, BXX BXXX is continuing to scout for new IT talent and hiring professionals around the world.
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NEW YORK (CNNMoney.com) -- The final week of January began with a bloodbath for the job market, as over 65,400 more cuts were announced on Monday alone.
At least six companies from manufacturing and service industries announced cost-cutting initiatives that included slashing thousands of jobs.
About 200,000 job cuts have been announced so far this year, according to company reports. Nearly 2.6 million jobs were lost over 2008, the highest yearly job-loss total since 1945.
Put your mouse where your mouth is
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outsourcing benefits
I'm the manager of a "work center" at vocational rehabilitation facility. Outsourcing is a great money saver for large and small industries. We have been doing assembly, packaging, manufacturing, etc for industries for 30 years. Our customers use us because we meet their schedule and save them time and money. It also provides income for our workers with disabilities.
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