The offshoring of corporate business services jobs to India will begin to decline by 2014, according to new research from The Hackett Group, Inc.
The research foresees that the traditional model of US and European companies moving finance, IT, and other business services jobs offshore will reach the end of its lifecycle over the next 8-10 years.
While corporations in the US and Europe will move an additional 7.5 lakh jobs to India and other low-cost geographies by 2016, this will taper off over the next few years.
The Hackett Group's offshoring research, which examined available data on 4,700 companies with annual revenue over $1 billion headquartered in the US and Europe, found that by 2016, a total of 2.3 million jobs in finance, IT, procurement, and HR will have moved offshore. This represents about one third of all jobs in these areas. India is by far the most popular destination, with nearly 40 per cent of the jobs being offshored headed there.
But the research sees additional offshoring levels in business services, which are currently at around 1.5 lakh new jobs each year, levelling off or declining after 2014.
It also found that of the 5.1 million business services jobs remaining onshore at the US and European companies in 2012, only about 1.8 million have the potential to be moved offshore with 7.5 lakh of those moving by 2016.
Hackett's research also found that automation and other productivity improvements will have caused the elimination of 2.2 million business services jobs at these companies between 2006 and 2016, and these factors are currently driving the elimination of around two lakh jobs annually.
The Hackett Group Chief Research Officer, Mr Michel Janssen, said, “After the offshoring spike driven by the Great Recession in 2009, the well is clearly beginning to dry up. A decade from now the landscape will have fundamentally changed, and the flow of business services jobs to India and other low-cost countries will have ceased.”