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so Maris I wonder if we can start with
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you uh years ago uh there was this a lot
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of hubub about uh offshoring
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uh with uh you know work being sent
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overseas uh to basically lowcost
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countries uh recently uh there's been uh
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some research and youve you've taken the
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lead on that uh on a phenomenon called
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reshoring and I wonder if you could uh
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start by explaining exactly what that is
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sure maybe um I could start by just
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putting the whole thing in context
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because you said you know there's been
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this phenomenon of out sourcing or out
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offshoring and now which suggests that
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companies thinking primarily of us
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companies but it applies in fact to any
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company in any operating anywhere of
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taking their operations their
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manufacturing operations and moving it
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somewhere else and the the the the most
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favored or the most obvious choice in
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the last 10 years has been China and
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other Asian sources but there's been a
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lot of other places that manufacturing
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is gone so just to put things in context
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if you look at statistics of the
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manufacturing sector and you look at the
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employment in manufacturing and you look
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at the output of the manufacturing
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sector there these two lines the output
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for the last 50 100 years has been going
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up steadily employment has been more or
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less flat at about 20 million people for
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40 50 years and so that raises the
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question how could this happen how could
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we be producing more and more
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manufactured products not only here but
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this is also true in other developed
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countries and and around the world with
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fewer and fewer people and there are
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many explanations automation maybe
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everybody went to the Wharton School and
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learned how to be more efficient we can
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hope right that we had some small impact
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there but you know productivity has
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definitely gone up and this this is you
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know
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this is this is what's considered to be
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the the normal pattern of economies
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developing the same thing happened a 100
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years ago or more the agricultural
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sector as well but if you go back 10
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years this line of 20 million employment
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dropped by 5 million and we're now below
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15 or 11 12 million something like
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that which has not which had not
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happened for decades so when we say
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there's been out Shor or globalization
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that has been going on for decades but
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there has been a fundamental shift a
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transfer of manufacturing operations out
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of the US in the last 10 years and we've
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lost 5 six million jobs meanwhile output
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continues to more or less go up with
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some fluctuation so that has been the
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phenomenon and it's become a very
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politicized issue you know the last
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election campaign all the candidates
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told us they had an answer to this and
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and one of the phenomenon that people
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are starting to suggest is that we can
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solve this problem by bringing
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manufacturing back to the home country
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and that's what the concept of reshoring
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is generally understood to me so thank
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you Morris now uh Scott turning to you
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from your your Vantage Point in the it
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space uh do you see uh uh the the same
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Trend that Morris talking about of of
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jobs essentially coming back to the US I
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think the uh it's a tremendous parallel
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between what's happened in manufacturing
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and what's now happening in technology
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uh it's almost identical but maybe just
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a little off in terms of timelines if
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you look at the technology space ever
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since really about Y2K there's been a
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tremendous push of uh technology work
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and it work offshore and the primary
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location for that has been India so
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manufacturing to China technology to
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India it's almost identical parallels
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but we're we're definitely seeing uh
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especially over the last even maybe just
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12 months maybe two years a reshoring uh
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ground swell happening in the technology
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space as well the first thing to realize
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is that there's a tremendous demand for
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technology talent and this is a global
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you know demand uh you see the same
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thing in Europe you see it in Asia you
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see it in the states uh everybody's in
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in need of Technology talent but what
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we're seeing now is that cios who are
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the primary buyers of of Technology
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talent in the market are really looking
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for four options they're looking for the
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ability to have technology Talent on
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site they looking to still be able to
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Offshore uh certain pieces of their
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portfolio they're they're starting to
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Now look for Nearshore options uh to
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support their businesses in in Nearshore
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uh regions but the new phenomenon is
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they're looking for onshore uh options
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and these would be in you know lower
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cost um but still high quality areas so
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tremendous parallel between
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manufacturing and technology is is now
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happening that's great and we come back
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to each of these factors in some more
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detail but for the moment I just want to
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coming back to you moris about what you
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said about manufacturing so uh are there
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any striking examples of companies that
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have reshored their operations and uh
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that that you could offer
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us there are many many of them and many
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of them have been reported in the Press
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uh one of the most uh widely cited one
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and I'm only going back let's say in the
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last 12 to 24 months uh General Electric
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investing a billion dollars to bring
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back all of their Appliance
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manufacturing to Kentucky 5 10 years ago
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they had shut were ready to shut down
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the factory offshored everything and now
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they're bringing back Appliance
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manufacturing they're also bringing back
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uh ge as other manufacturing uh that's
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one example but there have been other
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examples uh Apple announced that they're
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going to be making or assembling some
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computers in the US Lenovo has announced
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that they're going to be assembling
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computers in the US uh there are many
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many examples the question though that
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everybody is asking and go back to my
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original Point we've lost 5 million
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jobs jobs are coming back and and we can
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talk later about the arguments why
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that's happening but there are those who
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say we're never going to get those jobs
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back maybe we'll get half a million back
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maybe we'll get a million back but we're
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not going to ever get back to where we
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were before and others you know the
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government is saying no we're going to
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we're going to Quick jump start this
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whole process and this this we will
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return to where we were so this is a
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very open and hot contested question you
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know yes there's reshoring but you know
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the same question by the way is asked in
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China and
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Japan uh the the reshoring to them is
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offshoring our reshoring is their
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offshoring and they're also looking to
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Offshore and so these questions are
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being asked everywhere so so the uh if
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you look year to year just to for a
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quick followup uh which where is the net
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outflow or inflow of jobs is it still
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being more offshored rather than
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reshored or is the trend starting to
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change I think we we gaining jobs in the
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last year net positive uh but as I said
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the numbers are much smaller than the
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numbers that have gone out uh and we're
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still losing jobs right now what do you
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see Scott in the in the in the
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technology space uh uh is it still uh do
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you see the volume of jobs coming back
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is it still uh greater than the is it
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Greater than the volume of jobs that's
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that may be still going out see I think
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again it's a very interesting parallel
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and it's almost the same companies that
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are doing the same thing you see uh ge
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and General Motors and MetLife has just
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announced uh you know a what they're
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calling a domestic Development Center or
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us delivery Center uh in the states and
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so it's those large companies who are
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now starting to build up their own
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operations uh in the US or working with
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Partners like a m tree to do it for them
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uh but this is probably in the early
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days I think manufacturing has a couple
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years Head Start where we saw uh
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micromanufacturing starting to happen
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and now you see some you know larger
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waves of manufacturing starting to
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happen but I think this is early days
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for technology but it's clearly a trend
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that is very visible uh and I think
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it'll be very hot uh there will be
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definitely uh a lot of companies in the
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market looking for local
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talent uh Morris I wonder if uh uh you
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give some great examples of companies uh
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is there some U broader Trend we can see
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in terms of Industries where re shuring
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is most visible and countries that are
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sending the most jobs back any overall
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observations there that's a great
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question you know if we go back to the
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origins of this I mean what what has
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happened in the last 10 years is um the
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decision to Offshore primarily China and
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other plac to Asia uh has been became
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what was called a no Bri trer you didn't
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have to do very much analysis the wage
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the labor cost the wage differential
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between China in the US was you know an
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order of magnitude if not more and so
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companies said you know under a dollar
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an hour and we're paying $25 an hour
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whatever the differences are this is a
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quote a no-brainer and so for 10 years
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companies and continue to do that uh
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have said we know we're going to go
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there now in many Industries
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there are many other costs associated
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with where you Source in the supply
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chain as you can imagine plus uh there
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are some very interesting Trends the
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labor costs in China have been going up
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much faster than here um the exchange
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rate continues to be an issue uh
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government regulation continues to be an
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issue and there are some people now
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saying that we're approaching what they
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call a Tipping Point I don't know if you
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know Hal cirin from BCG you know is one
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example where he's famous for saying you
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know once that wage differential gets
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below a certain point and we're close to
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it then this Advantage will come will
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have dissipated and they will come back
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now what to your question where does
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this matter obviously in Industries like
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apparel which have a high labor content
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this is a no-brainer but if you go to
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you know one industry I do a lot of work
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with is Aerospace and defense making
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aircraft engines it's not such a
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no-brainer you know so where you need
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High te a lot of Talent technology and I
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think it is a very interesting situation
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where it's not just a question of
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lowcost Labor it never was but in some
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industries that was to be dominant but
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if you look at the labor cost in the
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fully loaded cost of a computer an Apple
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computer it's probably under 10% so it
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doesn't really matter that much from the
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purpose of where they Source if it's
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just a question of labor cost and so all
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these other factors are coming into play
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some are pushing back to reshoring some
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are continuing to push out and the
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answers will very much depend on the
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technology and the
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industry SC what's your perspective yeah
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and it's almost identical in the tech
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sector so I think the initial out
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Outsourcing and certainly offshoring
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efforts were clearly driven by labor
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Arbitrage but that's starting to change
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as well companies are looking for
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additional things like value ad and
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productivity increases and time to
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Market uh increases things like that so
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there's more than just labor Arbitrage
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going into the equation but I think it's
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important to note in the tech sector I
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don't believe that it's an either or I
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think it's that near Shoring or um or
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reshoring will continue to rise but I
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think Off Shoring will continue to rise
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too because I think the whole Tech
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Market is in a growth mode so companies
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are really not looking for one or the
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other they're looking for both and it
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goes back to my initial point that uh
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cios and and you know and larger
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companies are really looking for options
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they want to have the ability to get the
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best tech talent in multiple markets so
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it's not like they're choosing India
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over the us or South America over India
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it's really that they want all of that
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but they just want to figure out what's
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the right balance for their
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company
