Expect U.S. companies to step up their outsourcing strategies as they struggle to control costs and stay competitive, says Ben Trowbridge, chief executive officer of the global consultancy Alsbridge. Contrary to some claims that manufacturers will reconsider their outsourcing strategies in light of the accompanying logistical headaches, he believes the trend will remain strong. The cost of labor in India, for example, will remain neutral when compared with wage inflation in the U.S., he says. But China will continue to lag other markets, especially India, as a source of English-language-based business-process outsourcing. Reasons include language differences, a low national birthrate, and issues related to intellectual property protection. Meanwhile, Trowbridge predicts, new areas of Eastern Europe will open up as low-cost sources for manufacturing and shared services. And India will continue to win more complex outsourcing deals. Procurement strategies, too, will see a increased reliance on outsourcing in 2007, "as certain providers begin to achieve true scale and market share [and] as others continue to challenge them."
