Business Corner
STRATEGIES & ANALYSIS
in the “backshoring” process, it may be
sourced to Brazil, Germany or any
other geographical location for that
matter. The point is, whether its offshore, onshore or nearshore, the best
place to perform a given piece of work
from a business perspective may or
may not be the good ole USA.
“As the concept of offshoring
matures and settles, companies and
vendors can expect a natural rebalancing as they determine what work
can best be performed where,”
according to Vinay Couto, Ashok
Divakaran and Mahadeva Mani in a
recent Strategy + Business article.
Globalization will force our economic decisions to the world geogra-phies where the lowest all-in prod-uct/systems costs exist. Of course we
know that offshoring is alive and
well. However, we also have to consider the near collapse of the U.S.
economy and how it has effected
global markets to realize the extent
to which the U.S. has increased its
sourcing.
Some economists are saying, with
only modest evidence thus far, that
the U.S. is in the midst of witnessing
a significant change in the path and
dynamics of outsourcing. Chemark
would like to report that we are agreement with this contention, but we
cannot. Yes the strengthening of the
U.S. dollar will help but it cannot by
itself shift the direction dramatically.
Other influences that will continue
to support offshoring—not backshoring—are:
• More companies are planning on
offshoring versus not offshoring;
• U.S. labor costs cannot fall enough
to offset the gap that exists between
it and China and India;
• Skilled labor available in the U.S.
to do the work that is offshored now
will not be enough going forward;
and lastly,
• Fuel price increases affect devel-
oped countries more than undevel-oped growing economies; as a result
transportation costs favor offshoring.
Based upon these factors, the logical
conclusion is that offshoring will con-
tinue to be a viable alternative for
both manufactured goods as well as
services. CW
See Chemark’s ad this month on page 45.
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