ADVANTAGES ARE NARROWING
Why the shift back to the U.S.? Increasingly, business leaders are fnding that the benefts of ofshoring just
aren’t as substantial as they once were.
Besides, there’s something to be said
about being able to fnd critical IT support down the hall rather than across
Companies of all types may have
initially realized the cost savings they
sought when they moved overseas, Larkin says, but over the last decade the
diferential has started to shrink in
some places. For example, labor costs
in India have been rising 10 percent
year over year, he notes. Wages and
beneft costs also have been increasing substantially in China and other
Some of the jobs that were in those
countries now go to Eastern Europe,
particularly Romania, or to the Philippines, Larkin adds, but many employers are coming home.
“There are plenty of companies that
In 2012, General Electric, one of
the early leaders in the ofshore out-
sourcing movement, announced that
it would bring back thousands of jobs,
including I T work. Since then, scores
of employers have followed GE’s lead,
according to reports compiled by the
Reshoring Institute, including GM,
Target and Visa, which all announced
plans to bring tech jobs back in-house
IT contractors and company lead-
ers moving their IT support opera-
tions back to the United States will
need to lean on HR to efect a smooth
transition, say reshoring experts,
and planning is paramount. Before
IT leaves a foreign locale, companies
need to consider employment con-
tracts, scout U.S. locations, assess
workforce skills and secure tax incen-
tives. It’s a challenging and complex
process, but it ofers broader lessons
for HR. The strategies you pursue to
aid in IT’s transition can be used to
help bring any type of business home.
have a good ofshore experience, and
reasons to ofshore are valid. But af-
ter they’ve their dipped their toe in the
pool, a lot come back,” he says.
Many businesses were not factoring in the true costs when making the
leap ofshore, says Craig Shaneck, sales
manager for TPA Technologies, an IT
recruiting frm based in Boston. Now,
“there are better metrics about what
it is costing you,” he says. “The hourly
rate is not the end-all, be-all metric.
The ofshore partners will say, ‘Sure, we
can do it for this, for so much an hour,’
but what is the total cost?”
An arrangement that requires taking an 18- to 20-hour plane trip to
straighten out problems can be difcult to maintain. “There’s more management and oversight and soft costs
attached to ofshoring,” Larkin says.
And the quality might not be what
you’re used to. If employees, customers and managers receive sub-par service from overseas tech support, “user
revolt” may result, making it more
Rosemary Coates, executive director of the Reshoring Institute,
a nonprofit research and consulting organization, offers the
following advice for companies that are considering reshoring
businesses of any type:
PLANNING THE JOURNEY
Calculate the total costs of ownership (TCO) abroad,
including travel, work-quality issues and security, not just
wages. Some organizations ofer TCO calculators, but keep in
mind each business is unique. (The Reshoring Institute’s cal-
culator can be found at www.reshorenow.org/tco-estimator.)
Put a team together to plan and execute the reshoring.
Include representatives from finance, legal, project man-
agement and HR.
Be innovative. A lot of re-engineering can be done to
make processes more efcient, especially with call centers.
Automation is key.
Make sure there are workers with the
necessary skills at the U.S. location(s)
chosen by the company.
Work with local, state and
federal government to receive tax
Rebuild the company’s supply base,
making sure potential vendors are
aware of the planned move back home.
Expect the process to take six to 12 months.