SMB Outsourcing Decline Could be MSP Gold Mine

By Dan Berthiaume

Despite all the hype surrounding outsourcing as a drain on the US job market, outsourcing in the technology industry is actually decreasing. For the third year in a row, the annual Technology Outlook Survey from accounting/consulting organization BDO indicates the tech industry is throttling back on outsourcing manufacturing and services.

Most notably, only 32 percent of the 100 US CTOs polled say they currently outsource services or manufacturing to companies outside the US, a drop of nearly 50 percent from 62 percent in 2009. In addition, 80 percent of respondents not outsourcing outside the US now have no plans to do so, and 50 percent plan to hire more employees this year. BDO analysts say increased pressure to create jobs at home, a maximizing of the increased output companies can achieve with fewer employees, and greater confidence in the US economy are all contributing to this decline in outsourcing.

Why MSPs Can Fill the Gap for SMBs

The study does not specify the size of respondent companies, but most likely SMB tech companies are following general trends away from outsourcing and toward performing more work at home. However, while large tech companies will most likely fill the outsourcing gap with new hires, the solution may not be quite so simple for SMB tech companies.

SMBs generally have tight hiring budgets, and also are less able to upgrade and expand their IT networks to support new employees than larger companies. And of course, if large tech companies are on a hiring binge, they will likely attract the best candidates, leaving SMBs with a lower-quality field of candidates from which to choose.

US-based MSPs can effectively fill the outsourcing gap for SMB tech companies by offering managed services to replace the processes, services and solutions that were previously outsourced. This way, SMBs can continue to take advantage of the cost and efficiency benefits provided by performing tasks out of house, and also keep jobs in the US while avoiding the many hassles and complexities of an international business relationship. Even the most ardent opponent of offshore outsourcing can get behind the domestic MSP solution.