Executives, Global, Outsourcing

Global executives say yes to outsourcing

15 Mar 2004 | (Survey)

A survey of 7,300 senior executives around the world by consultant McKinsey Co found that four out of five executives think outsourcing is good for the global economy.

Split continent-wise, the ratio was the same for executives in Europe, Asia and the US, the survey, released on Thursday, said.

When queried on the implications of outsourcing on their own businesses, 70 per cent of the Europeans said it’s good, 97 per cent of Indians said the same, as did 86 per cent of Chinese.

But the figure falls in America, which is home to the world’s most globalised companies — only 58 per cent of the US executives were positive on the development.

On the global economy, the executives were cautiously optimistic, and most of them thought it was healthier than it was six months ago, but they saw the improvement levelling off by mid-2004.

They viewed Asia as the region with the most promising growth prospects for 2004.

Executives of smaller companies said hunting for talent and capital were their main worries, while larger ones were concerned that consumers would rein in spending.

They also felt policies on foreign direct investment were critical, especially to executives in developing economies.

The survey, conducted in January, polled leaders from a wide range of industries and regions to develop a worldwide barometer of executive sentiment on economic and business trends.

About 12 per cent those surveyed were chief executives from 115 countries.

A confidence index derived from the survey registered a level of 67 on a scale of 100, where 50 or more indicated optimism. Executives in developing markets had a confidence index of 71, indicating they were more bullish than the overall survey average.

Executives in China and India were more optimistic than their peers in the rest of the world, with 87 per cent and 80 per cent, respectively, predicting the economic climate will get even better by July. Of the other executives surveyed, 73 per cent shared that sentiment.

Although executives were optimistic, they didn’t see an easy road ahead. In most regions, economy was the top concern for the executives.

The exception was from the emerging markets, where executives were focussed on the search for talent.

Beyond the economy, executives of larger companies worried about the sustainability of consumer spending — considered the lifeline that kept the recent US economic downturn from becoming still worse — followed by the competition for talent. Many also listed currency fluctuations, pricing, and global competition as key concerns.

Executives from smaller companies, however, believed that hiring and retaining talent was the second most important concern. Access to capital, which executives at larger companies hardly notice, comes in third.

Perhaps not surprisingly, executives in developing markets were more bullish than are their counterparts in developed ones about the benefits, for companies and the world economy, of outsourcing manufacturing and business processes to low-wage countries.

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