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Outsourcing: Affected US Economy Recession?

I recently read in the news that US economy’s downturn might affect outsourcing. We know that US economy is involved vastly in most of the world economies, and it says that any major slow down might lead to a global downturn. If this happens in the US economy, there will be a huge downturn to the offshore outsourcing countries, especially India, Ireland, South Africa and the Philippines, who have benefited from outsourcing because of the low-cost of labor; and wherein most of the companies are from the US.

Slowing down of US economy means that companies, industries, and organizations in the US that outsource, are evaluating the recessionary trends. This might automatically translate into more interest in offshore outsourcing.

Outsourcing could be a strong business proposition in good times, and it’s an even stronger proposition when bad times last. Offshoring will grow over the long term, since it drives cost savings. However, this might not be quite so in the short term.

With the advert of the outsourcing trend, many IT/ITES companies have been joining the wave of outsourcing, growing by leaps and bounds.

It was like the outsourcing industry around the world was run as a subsidiary of the US/European economy. However, since the last 6 months, the US economy has undergone major changes. There had been a severe sub prime crisis hitting the economy, with the US dollar value depreciating to record levels.

The credit crunch might have a positive or negative effect on the outsourcing industry. Downturn in the US economy plus possible recession means technology and outsourcing as solutions to the need to slash overheads and minimize any negative impact on the bottom line.

The truth is that the US economy is at an unpredictable tipping point. If a very serious recession hits, then companies might actually scale back on outsourcing – this would be the resolve of service companies having less customers, therefore needing less service provision and therefore believing that a scaled-down internal team would suffice as opposed to an outsourced department.


May 20, 2008 - Posted by | Outsourcing | , , , , , , ,


  1. Is Outsourcing in a risky stage ? i think anyone cannot undergo Outsourcing, because it is increasing rapidly day by day……..

    Comment by It outsourcing companies | May 23, 2008 | Reply

  2. Actually, outsourcing is a risky proposition. Hopefully, the sourcing advisor you select will do their best to anticipate, define, monitor, and mitigate the risks involved – but you should accept that there are risks. Therefore, before knowingly taking the risk, it is important to understand whether it has a chance of paying off.

    Comment by kobe245 | May 23, 2008 | Reply

  3. [..] I agree with you ! but every should accept the fact that, Outsourcing is becoming very famous in many of the countries all the over the world[..]

    Comment by It outsourcing companies | May 24, 2008 | Reply

  4. Yes.. well thanks for the comment.. I really appreciate it.

    Comment by kobe245 | May 27, 2008 | Reply

  5. Thanks for this post. I’m a freelance developer here in Cagayan who takes work from US clients, and I can really feel the effects. Not much work coming in, zero job offers from additional clients (I’m an Odesk contractor, btw) and not that much high-paying job opportunities available.

    Just wanna share a good article on the recession.



    Comment by Mike Suria | October 22, 2008 | Reply

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