Boston Consultancy Pushes For Outsourcing To India

Washington, July 2 | Updated: Jul 3 2004, 05:32am hrs
In a significant report, an influential consultancy firm has asked American firms to outsource more work to India, including high-powered functions like research and development, and warned bluntly that those who would not do so face extinction.

Companies risk exteniction if they hesitate in shifting facilities to countries with low costs because the potential savings are so vast, said a recently-released report by Boston Consulting Group.

The report also cited a view among US executives that the quality of American workers is deteriorating, compared to the high quality of workers in countries like India and China, The Washington Post reported. "The largest competitive advantage will lie with those companies that move soonest," the report states.

"Companies that wait will be caught in a vicious cycle of uncompetitive costs, lost business, underutilised capacity, and the irreversible destruction of value," said the report, released in May.

Boston Consulting, which counts among its clients many of the biggest corporations in the US, tells the companies that they have been too reluctant rather than too eager to outsource production to "LCCs" (low-cost countries).

"Successful companies ask themselves, what must I keep at home rather than what can I shift to LCCs," says the report. "Their question is not why outsource to lccs but "why not"