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What Is The Future of Outsourcing?

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  • What Is The Future of Outsourcing?

    Outsourcing is still increasingly being utilized by big companies especially from rich countries into poorer countries where salaries and cost of operation is far lesser than running them in their own country. The Philippines is one of the recipients of outsourced work and it is also one of the major source of income of residents here nowadays. I think it's an advantage both on the businesses outsourcing some of their work and on the countries or areas receiving the work.

    What do you think is the future of outsourcing? How do you see it in 5 or 10 years?

  • #2
    Re: What Is The Future of Outsourcing?

    I'm not sure if anybody is going to be able to predict with any certainty the future of outsourcing, and especially to other countries as the global market's at the moment aren't as stable as they have been in the past. There's no doubt in my opinion that a lot of the bigger companies will still outsource to various countries around the world, but as for the smaller ones I can see lot of businesses starting to do a complete process from start to finish in-house.

    The initial cost might be large, but at the same time if a business isn't sure what the future of the global economy might be, they may prefer to play it safe and know exactly what their costs might be in the future rather than taking the chance that it may fluctuate.

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    • #3
      Re: What Is The Future of Outsourcing?

      I think it will continue to grow as long as the internet keeps surviving and thriving since it is a big part of what made this methodology grow more from just manufacturing and production companies being able to outsource. As long as we can easily communicate and monitor events from the other side of the globe this easily I don't see much of a reason for this movement to slow down although I do think it has already peaked.

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      • #4
        Re: What Is The Future of Outsourcing?

        We work in a Global economy now. Products are sourced from all over the World. We partner with other businesses all over the World. And increasingly business 'outsources' functions that were traditionally conducted in house. I see no reason for this to slow down.

        What is interesting to watch is how practices such as 'low cost country sourcing' move slowly around the World as labour and other costs increase. An example is the rise of Bangladesh in clothing production. What is also good to see is the increased awareness and focus on 'ethical' sourcing.
        Rob O'Byrne
        Site Owner & Sponsor

        | Supply Chain Consultants | Supply Chain Conference | Supply Chain Education |

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        • #5
          Re: What Is The Future of Outsourcing?

          Outsourcing will continue to grow. Everything is no longer being built in the country that the company was founded on. If I ran a big corporation, my duties would be to make the share holders happy, and not the employees that demand $30 usd an hour. If I can have the product made at a fraction of the cost domestically, and at the same time put more money into my pocket, I'm going to do it. You lower the manufacturing cost of the product and in turn make more profit. Simple as that.

          The downside to that is locally, those jobs that were shipped over to third world countries, they get hit hard with no employment. Flint Michigan is a perfect example of how a industrious city can turn for the worst in a matter of years with this type of practice.

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          • #6
            Re: What Is The Future of Outsourcing?

            Well as long as there are differences in costs to produce, then outsourcing does not seem to be going anywhere anytime soon. That said, though, it is difficult to really think about what we are in for in terms of business practices in the future. There are just so many factors at work, including global politics and legislation, so things can really change quite quickly. I am guessing that we will see another trend of buying products made at home, because those seem to come along once every couple of years.

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            • #7
              Re: What Is The Future of Outsourcing?

              Outsourcing will always have a bright future ahead. Since we're now living in a highly industrialized era, where labor can be cheap in certain places and expensive in others, companies and small-scale businessmen would always try to find ways to increase productivity with the least possible cost. Outsourcing addresses that need, making it relevant for decades (even centuries) to come.

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              • #8
                Re: What Is The Future of Outsourcing?

                Outsourcing is gradually becoming the new order of obtaining productivity. This method has served to enable the producers of goods and services to save lots of money on the cost production. They are able to pay lower rates to have the job done because it's considered that cost for workers to commute to work would have been eliminated. The producers will not have the to face up to to a lengthy bargaining process involving the unions and many of the costs for providing the staff welfare programmes will not be required.

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                • #9
                  Re: What Is The Future of Outsourcing?

                  I expect that companies will be outsourcing more in order to cut costs. I believe though if outsourcing will be cutting into the taxes government collect, they may have companies which outsource pay more taxes thus canceling the savings they'd make. So while outsourcing will be around for a while when people start losing their jobs because of it, there has to be a change unless companies want to relocate overseas.

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                  • #10
                    Re: What Is The Future of Outsourcing?

                    Without a doubt. It will continue to grow, as previously poor countries from the "Third World" are developing steadily, like India. There will be far more qualified people with a wide array of skills starting new businesses or just applying high demanding jobs, whether We like it or not. There will be some markets that will shrink compared to others, like desktop computers vs. smartphones and tablets, or most old factories with human labor vs. atomatized
                    manufacturing modern factories. Market's growth is somewhat unpredictable, but we can be certain that It will grow.

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                    • #11
                      Re: What Is The Future of Outsourcing?

                      Originally posted by Vampa View Post
                      I expect that companies will be outsourcing more in order to cut costs. I believe though if outsourcing will be cutting into the taxes government collect, they may have companies which outsource pay more taxes thus canceling the savings they'd make. So while outsourcing will be around for a while when people start losing their jobs because of it, there has to be a change unless companies want to relocate overseas.
                      In the long run, it is more expensive to outsource since the salaries are premium. However, companies tend to resort to outsourcing in order to avoid the hassle of giving free training to the newly hired. Besides, when there is an issue with an outsourced worker, they can easily ask for a replacement, as simple as that. It is like hiring a worker with a guarantee that it will perform good otherwise it would be like a product that would be requested for a refund (or replacement). And for overseas factories, particularly in poor countries, the cost of salaries are way too low compared to the local workers. In effect, the amount of savings in terms of salaries is substantial to maintain an office abroad.

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                      • #12
                        Re: What Is The Future of Outsourcing?

                        Originally posted by gracer View Post
                        Outsourcing is still increasingly being utilized by big companies especially from rich countries into poorer countries where salaries and cost of operation is far lesser than running them in their own country. The Philippines is one of the recipients of outsourced work and it is also one of the major source of income of residents here nowadays. I think it's an advantage both on the businesses outsourcing some of their work and on the countries or areas receiving the work.

                        What do you think is the future of outsourcing? How do you see it in 5 or 10 years?

                        I personally believe we're exciting that era, and that outsourcing has a rather grim future. This is a natural pattern, as industry evolves processes improve and we get more efficient at doing the same task, which means: more automation, less need for human intervention/labour hands.

                        Even support call centres will get less work as the processes improves and there is less need for troubleshooting and/or the business process is more efficient and automated so the client doesn't have to call just to, say, change his address.

                        Industry wise, the outsourcing mainly happened with laborious industry with low levels of automation (such as garment/textile). Even this in the long run is on the wane, because research is happening right now to create robots capable of handling flexible objects. And I believe it is only a matter of time before such robots become a reality and tons of jobs in Textile/food processing/wire assembly will simply be flushed.

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                        • #13
                          Re: What Is The Future of Outsourcing?

                          In the trend of outsourcing the smaller companies which are reluctant to outsource would get thrashed because of higher labour cost.

                          We are already seeing a huge shift in the strategy of bigger companies who can create their own office in third world countries, pulling out of contracts to outsourcing companies and setting up their own office in those countries.

                          So in the future the only clients the outsourcing companies would have would be the ones for whom it does not make economic sense to open their office in that country.

                          The outsourcing industry also is gearing up for the same.

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                          • #14
                            Re: What Is The Future of Outsourcing?

                            Originally posted by Dropshipping View Post
                            In the trend of outsourcing the smaller companies which are reluctant to outsource would get thrashed because of higher labour cost.

                            We are already seeing a huge shift in the strategy of bigger companies who can create their own office in third world countries, pulling out of contracts to outsourcing companies and setting up their own office in those countries.

                            So in the future the only clients the outsourcing companies would have would be the ones for whom it does not make economic sense to open their office in that country.

                            The outsourcing industry also is gearing up for the same.
                            I've been seeing this a lot in my country lately. More and more companies from high economic countries are now opening businesses here in my country and I do think this will still be increasing soon. Even Trump has opened his business here which has been called the "Trump Tower". Paris Hilton also opened a real estate business way ahead of Trump which has been called the "Paris Beach Club".

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                            • #15
                              Re: What Is The Future of Outsourcing?

                              Originally posted by gracer View Post
                              Outsourcing is still increasingly being utilized by big companies especially from rich countries into poorer countries where salaries and cost of operation is far lesser than running them in their own country. The Philippines is one of the recipients of outsourced work and it is also one of the major source of income of residents here nowadays. I think it's an advantage both on the businesses outsourcing some of their work and on the countries or areas receiving the work.

                              What do you think is the future of outsourcing? How do you see it in 5 or 10 years?
                              Let's not confuse the term Outsourcing with Offshoring.

                              Outsourcing in Supply Chain and Logistics generally just means 'contracting out' to a third party. Hence the term 3PL, Third Party Logistics.
                              Regards

                              Top Link - Site Founder

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