Twice as Many U.S. Firms Plan Overseas Expansion, Survey Shows

03rd August 2009, www.bloomberg.com

The number of U.S. companies planning to expand overseas more than doubled over the past three years, a survey showed.

More than 50 percent of companies polled in 2008 had a strategy to set up links abroad, up from 22 percent in 2005, according to a report released today by the Offshoring Research Network at Duke University in Durham, North Carolina. “Very few” of the firms planned to bring any of that work back to the U.S., the report said.

The need to get products to markets faster and a scarcity of U.S. scientists and engineers is behind the drive to establish an international presence, said the report, written in conjunction with the New York-based Conference Board. Most of the projects sent abroad in 2007 were related to “product and software development,” it said.

Outsourcing or offshoring “makes companies, whatever their country of origin, more competitive by increasing speed to market and compensating for domestic talent gaps,” Ton Heijmen, a senior adviser at the Conference Board and one of the report’s authors, said in a statement.

Small- and mid-sized companies aiming to innovate their products are at the forefront of outsourcing operations because they can’t compete for trained staff in the U.S., the report said, without giving details on how those firms were defined.

The smaller companies are “more adept” at finding qualified help in countries other than China, such as Brazil, Egypt, Sri Lanka and Russia, the report said. The smaller firms have also become skilled at using Internet-based collaboration technologies and prefer teaming with other small, specialized companies, according to the report.

To contact the report on this story: Carlos Torres in Washington Ctorres2@bloomberg.net