Which companies are outsourcing what?
A lot of software companies are shifting their work from the US to China, a new report finds.
The report from consulting firm McKinsey & Co and consulting firm Technalysis found that more than two-thirds of software outsourcing firms in the US are outsourcing to China.
It’s a trend that has continued even as the number of people employed in the software industry in the country has grown.
The McKinsey report also found that US outsourcing is driving up the cost of hiring people for tech jobs.
The US tech sector is booming, with nearly 70 per cent of companies reporting strong growth in 2016.
McKinsey also found a rise in the number who were employed in IT and cloud jobs, which it attributes to the tech boom.
However, it said it could not explain why so many of those jobs are being outsourced to China rather than the US.
“A large proportion of these outsourced IT roles are filled by foreign nationals and this has a ripple effect on American workers,” it said.
The rise in China-led outsourcing is a worrying development, and it raises questions over the quality of American-based IT jobs.
For many American IT workers, their jobs have stagnated over the past decade, with few new jobs opening up.
It could also affect the quality and value of their retirement savings.
A McKinsey study in February found that American IT jobs have declined by 9 per cent over the last decade, while China-based firms are seeing a rise.
The tech industry in America has seen growth in the past few years, but some analysts believe the growth has been a lot less dramatic.
The number of American tech jobs is up a lot over the years, and the industry has grown by over 7 per cent per year over the course of the past five years, according to Technalysis.
“As more and more American companies are choosing to shift their technology to China instead of the US, it’s no longer clear that the IT sector is actually growing as quickly as the industry would like,” McKinsey analyst John Lappig wrote in a research note.
“Companies have been forced to move jobs overseas to meet increasing demand for their services, and these new IT jobs will likely only grow in the coming years.”
IT worker, outsourcing and outsourcing software: The main drivers of the outsourcing story McKinsey said it expects US companies to spend more on outsourcing, as the technology industry has become more competitive.
The company expects that IT outsourcing will grow by $9.9 billion in 2019, and that the number that outsourced their work will jump from 9,600 to 10,700.
It expects the number at large to grow by another $12 billion, with the number working in this category up by nearly a third from 8,400 to 10.7 million.
But it also believes there will be some jobs at home that will go unfilled as outsourcing is more likely to be a big driver of the overall outsourcing industry.
IT outsourcing: A lot is happening, but is outsourcing the main driver?
Technalysis expects that the outsourcing trend will continue, but that it could take longer to get the job done.
“The outsourcing of work will continue to accelerate, and IT outsourcing jobs will be needed for all sorts of industries and tasks,” the report said.
It also noted that the growth of the IT outsourcing sector could also be slowing.
IT jobs: How will this affect retirees?
IT outsourcing could also have a negative impact on retirees.
“While there is some evidence that people have started to retire in greater numbers due to outsourcing, the impact will be more modest compared to many other industries where IT outsourcing has increased,” the McKinsey note said.
“There will be less demand for IT workers and more demand for those who are skilled and experienced in other occupations.”
IT jobs and retirees: Are they really the key driver of outsourcing?
“The impact of outsourcing on retirement has been mixed,” said the McKinsellys report.
“This suggests that while outsourcing can have a positive effect on employment, it can also have negative impacts on retirement security.”
It’s hard to know exactly what effect outsourcing is having on the retirement security of Americans, given how little it is known about the companies that are outsourcing their work.
Some studies have suggested that outsourcing could help the US economy, as workers who are not paid for the work they are doing might have to leave the country to find a new job.
However those studies have also suggested that these workers are likely to stay in the job for longer than previously thought, and may end up in other industries as well.
“It’s not clear whether the overall number of jobs that are outsourced will be a factor in determining retirement security in the future,” the research note said, adding that this trend is likely to remain the case.