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BDO United States

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Keri Toomey
Bliss Integrated Communication
212.584.5471
Keri@BlissIntegrated.com

Tuesday, February 14, 2012
FEWER TECH COMPANIES ARE SENDING JOBS OVERSEAS, BDO USA SURVEY FINDS
HIRING TO INCREASE IN U.S. TECH SECTOR; COMPANIES MORE RELUCTANT TO OUTSOURCE MANUFACTURING

CHICAGO – February 14, 2012 – Outsourcing in the U.S. technology industry has declined for the third straight year, according to a new study from BDO USA, LLP, a leading accounting and consulting organization. Among the 100 U.S. technology chief financial officers polled, just 32 percent say they currently outsource services or manufacturing to companies outside of the U.S. This marks a notable shift from 2009 when nearly twice as many companies (62 percent) were outsourcing.

As the tech industry moves jobs stateside, companies are looking to bolster their workforce in 2012. In fact, 50 percent of CFOs plan to hire more employees this year. The outlook is positive for tech industry jobs to stay in the U.S. Among the companies who are not currently outsourcing, 80 percent report that they are unlikely to outsource services or manufacturing overseas in the near future.

“With unemployment numbers still hovering above 8 percent, pressure is mounting from Washington to bring jobs home. The tech industry seems to be moving in that direction, which is good news for U.S. job seekers,” said Paul Heiselmann, in the Technology and Life Sciences practice at BDO USA, LLP. “Bringing services and manufacturing back to the U.S. is also a smart move for tech companies looking to improve the quality of service and reduce exposure to international risks and major supply chain disruptions.”

These findings are from the fifth-annual BDO Technology Outlook Survey, which examined the opinions of 100 chief financial officers at leading technology companies throughout the U.S. The survey was conducted from December 2011 to January 2012.

Other major findings from the 2012 BDO Technology Outlook Survey include:

Manufacturing Goes from Most Outsourced Function to Least. In a major shift, manufacturing went from being the most commonly outsourced function in 2011 (53 percent), 2010 (51 percent) and 2009 (54 percent), to the least cited outsourced function in 2012 (33 percent). The natural disasters that rocked Thailand and Japan in 2011, causing major delays in supply chains that are still not fully remedied, are the likely contributors to this change. Of the 32 percent of companies who are outsourcing, IT (63 percent) and R&D (51 percent) are the top outsourced functions. More CFOs also report outsourcing call centers this year (37 percent vs. 12 percent in 2011).

India Reemerges as Top Spot for Outsourcing. After declining in popularity from 2008-2011, India now leads the list of countries to which companies are currently outsourcing. In fact, 62 percent of companies outsourcing report that they source services from India, a major increase from 2011 (29 percent). China also remains a top destination, with both Western & Eastern Europe gaining in popularity.

Current Outsourcing Destinations

 2012

2011

2010

2009

2008

Canada

11%

9%

11%

4%

17%

China

39%

35%

44%

19%

46%

Eastern Europe

14%

9%

17%

12%

19%

India

62%

29%

36%

50%

60%

Latin America

6%

9%

22%

8%

19%

Southeast Asia

23%

24%

36%

31%

50%

U.S.

5%

6%

11%

8%

N/A

Western Europe

29%

24%

22%

19%

21%

Latin America & Western Europe Leading Locations for Future Outsourcing. The CFOs who are currently outsourcing (32 percent) were asked to choose one country or region that they are considering for future outsourcing. For the first time, Latin America was the most popular option (23 percent), followed closely by Western Europe (20 percent) and China (19 percent). A part of the nearshoring trend, Latin America has become an increasingly attractive option for tech companies, as it affords the advantages of proximity and a skilled labor force.

Future Outsourcing Destinations

 2012

2011

2010

China

19%

18%

28%

Eastern Europe

2%

3%

9%

India

12%

24%

21%

Latin America

23%

9%

N/A

Southeast Asia

5%

15%

18%

U.S.

1%

N/A

N/A

Western Europe

20%

3%

N/A

Sales and R&D Departments See Greatest Increase in Headcount. With 91 percent of CFOs predicting that hiring will increase or remain steady at their organizations, there is renewed confidence for jobs in the industry. CFOs expect to see the most new positions in the sales and marketing (41 percent) and R&D functions (23 percent), a signal that companies are aiming to bolster the product cycle. Other CFOs expect to hire the most new employees in manufacturing (15 percent), administration (12 percent) and management (5 percent).

The 2012 BDO Technology Outlook Survey is a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm, whose executive interviewers spoke directly to chief financial officers. Market Measurement used a telephone survey performed within a scientifically-developed, pure random sample of U.S. technology companies in the software, hardware, telecommunications, internet and information technology services sub-sectors.

Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.

About BDO

BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm services clients through more than 40 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multinational clients through a global network of 1,082 offices in 119 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firm. For more information, please visit: www.bdo.com