Think Global

As the topic of global outsourcing gains momentum, barriers are overcome and the scope of what organizational functions can be sent abroad expands. I came across this article by Alison Diana last week which shows that beyond China and India, other places including Russia, Ghana and Canada are also becoming important as the world advances to a point where regional economic structures are replaced by an integrated global economy.

What I found particularly interesting in this piece was the assessment that the US centers that are most susceptible to having foreign functions replace local workers are large cities such as New York, Chicago and San Francisco. The author states this is mostly due to the high costs of living associated with those centers, and the high concentration of IT workers.

This got me thinking. I went to the US Bureau of Labor's website to gauge the accuracy of Ms. Diana's comments. She is bang on. Although I sourced statistics from 2002, these provided a good predictor of current trends. Of 331 metropolitan areas in America, these stats revealed a median unemployment rate of 5.3%, and a mean of almost 5.6% (it should be noted that as of October 2003, this number has increased to 6.0%). Set against the backdrop of these numbers, San Francisco was number 215 on the list with a rate of 5.9%, Chicago came in at 266th with a rate of 6.7%, and New York was sandwiched between Laredo TX and Shreveport LA at 289th with 7.3%. On of the most interesting statistics I discovered was for San Jose - the IT capital of the world - it registered 310th with an unemployment rate of 8.4%.

This outsourcing trend is consistent with one of our favorite themes: decentralization is happening today -- adjustments are being made to align organizations to manage costs in an increasingly competitive global environment, as part of business continuity strategies.