EW January 2011

fast-growing IT firms are positioning themselves as more convenient, cost-effective alternatives to offshore outsourcing. Industry executives consulted by Business Week estimated that there are 20 such companies now, up from only two 12 years ago. While rural outsourcers will not replace the offshorers – India has outsourcing revenue of about $50 billion now, and that is expected to triple by 2020 – some of the American companies have reported double- and triple-digit revenue growth recently. In a 2009 report cited by Business Week , the research firm Gartner said that, while the rural companies make up only a sliver of the IT market in the US, they offer an “attractive alter­ native” for clients wishing to avoid any language barrier. Dealing with a domestic IT company, even one located far from an urban centre, also eases compliance with US data privacy regulations, the report said. The bottom line, according to Small Business Channel editor Nick Leiber at BusinessWeek.com , is that “US tech outsourcers in rural areas are competing with offshorers on convenience and with their domestic big-city rivals on price.”

The Economy

Modestly but measurably, an important economic index increases yet again

The most recent data in the Leading Economic Index (LEI) published by the Conference Board suggest that the economic expansion gathering some strength in the US will continue in the near term. Published 18 th November, the new data derived from ten key industrial components show a 0.5% increase (to 111.3) in the LEI for October, following a 0.5% increase in September and a 0.1% increase in August. A reading above 100 indicates gain; below 100, attrition. To Conference Board economist Ken Goldstein, the report indicates a mild pickup this spring, following the post-holiday lull. While the economy is slow, he said, change “may be around the corner.” Another Board economist, Ataman Ozyildirim, noted that gains in the financial components of the LEI helped its pickup in October. Another encouraging positive from the index is the lengthening of the factory work week, also likely to continue given the nascent uplift in the manufacturing sector. The Conference Board, based in New York, is an independent global source of objective economic data and analyses.

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EuroWire – January 2011