Outsourcing to India and Such

The outsourcing of accounting is an ongoing concern for those of us in the field. Friedman talks about the outsourcing of tax preparation to India, he forgets that with new tax software the average American has the ability to prepare taxes themselves. Today in the United States accounting functions are outsourced ranging from payroll, payables and receivables. Payroll giant ADP has already opened the second offshore facility in India (McDougall). And with more U.S. companies building production facilities overseas the inventory and manufacturing accounting will soon follow.

Offshoring allows companies to take advantage of two key areas. The first is low cost talent; as Friedman has pointed out Indian labor is much less then American. These low wages both in India and other developing nations will put downward pressure on U.S. wages. The second key is that technology driven processes allows companies to move accounting to India. This has allowed American Express and GE to lead the way by moving operations to India. As research and development continues to move to India and China new technology will bypass the U.S. (Prestowitz, 2005.).

Prestowitz, Clyde (2005). Three Billion New Capitalists: The Great Shift of Wealth and Power to the East. New York, NY. Basic Books.

McDougall, Paul (2007). ADP Opens Second Offshore Facility in India, Information Week, January 9, 2007. Retrieved June 22, 2008, from http://www.informationweek.com/news/management/outsourcing/showArticle.jhtml?articleID=196802294