We report results from last month's Culpepper Trends Survey on outsourcing plans in IT, technology and life science companies for 2007. Details are provided on type of business functions outsourced,  changes in outsourcing practices, and most popular countries providing outsourcing services.

For respondents that outsource at least one business function, 47 percent utilize domestic service providers (Table 1). There are no differences by company size.
 

Table 1: Outsourcing Location
Location of Service Provider	Percent of Companies
Most outsourcing is to domestic service providers.	47%
Most outsourcing is to foreign country service providers.	37%
Outsourcing is equally split between domestic and foreign service providers.	16%

Levels of Outsourcing Business Functions in 2007
Fifty percent of our participating companies plan to outsource a majority of their manufacturing and 60 percent a majority of legal activities in 2007 (Table 2). Although companies do plan to outsource a small portion, none plan to outsource a majority of other functions.
 

Plans for Outsourcing Levels in 2007
Some companies plan to decrease the level of outsourcing in areas such as Finance & Accounting, Marketing, and Research & Development (Table 3). However, in the case of both Marketing and R&D, we see an even higher percentage of companies planning to increase their outsourcing for these functions.

Nineteen percent of companies plan to increase outsourcing of their manufacturing activities, the most for any of the functions listed. Participants noted that increases in the outsourcing of manufacturing may assist in expediting product delivery to foreign clients.

Levels of Outsourcing Human Resources Functions in 2007
Over 50 percent of companies plan to outsource some of their benefits administration and technical/scientific recruiting responsibilities in 2007 (Table 4). However, few companies plan to outsource the majority of any HR function.

Countries Providing Outsourcing Services
India continues to lead the way as a resource for outsourcing services (Figure 1). Companies noted that they are exploring China and various European countries as possible 2007 and 2008 outsourcing locations.

Summary
For respondents that outsource all or some of at least one business function, 47 percent primarily use domestic service providers, while 37 percent use service providers in foreign countries for most of their outsourcing needs.

Legal and Manufacturing top the list of functions planned for outsourcing in 2007. Nineteen percent of companies plan to increase the outsourcing of manufacturing over 2006 levels.

India is the most popular source for outsourcing service providers, although companies plan to explore outsourcing service providers in China and various European countries in the near future.

- Jennifer Berthiaume & Will Parsons