Growing Trend in Onshoring
The Wall Street Journal ran an interesting story the other day that caught my eye. “Caterpiller Joins “Onshoring” Trend” (Kris Maher and Bob Tita, Wall Street Journal, 3/12/2010) pointed out that Caterpillar, the Fortune 500 manufacturer of heavy equipment, was planning on bringing significant portions of its heavy equipment manufacturing back to the US from overseas.
The article indicated that while this trend was small, a growing number of manufacturers were bringing work back to the US, citing a weak dollar which makes it costlier to do work overseas. According to the authors, companies were seeing growing disadvantages in offshore production, “including shipping costs, complicated logistics, quality issues, political unrest and theft of intellectual property.”
Now, don’t get me wrong, this movement is not a tidal wave, its more a trickle right now. But the reasoning behind it makes sense and is applicable in a lot of ways to the US transcription industry. Two of the issues cited above, quality and theft of intellectual property, are directly applicable to transcription. For years, hospitals and practices have put up with poor quality in the name of cheap transcription. As the standard of living rose in India and the Philippines, their costs have risen commensurately. Add to that the fact that the dollar has deteriorated in value and the overseas cost advantage is just not that overwhelming anymore.
The second issue related to transcription, theft of intellectual property, is analogous to the theft of protected health information (PHI). Countries such as China and India have little regard for US and European notions of intellectual property protection. And while companies can put as many safeguards and controls around our personal information as they want when they send it overseas, we all know that no one is going to stop a really determined thief; if they want our information, they’re going to get it. Put these two ideas together and I think we can see why respected companies such as Caterpillar are worried enough about protecting their multi-billion dollar investments in research and development that they are bringing work back onshore.
It’s my opinion that the onshoring trend will continue to advance for at least the next few years as the US economy continues to be slow keeping the dollar weak. The good news is that with the growing use of speech recognition and editing technology, the US based transcription industry should be well prepared to handle the increased work load without driving up labor costs.