Outsourcing jobs out of the U.S. played a big role in America’s escalated unemployment. But companies are re-thinking the benefits of outsourcing jobs out of the U.S. Some U.S. companies are bringing the work back home or closer to home, because it’s simpler, and can save time and money.
“It’s no secret that the Great Recession had a devastating effect on the US manufacturing base. Between 2008 and 2009 more than one trillion dollars bled out of US companies that make everything from food to advanced aerospace and defense products. Lately things have begun to look a little better — the value of US manufacturer shipments was about $4.9 trillion in 2010 compared to $4.4 trillion in 2009. A $500 billion improvement is nothing to sneeze at, but another shot-in-the-arm may be on the way.” Bizmology www.bizmology.hoovers.com/2011/12/01/is-manufacturing-returning-to-the-us/
The time zone difference, expense of extensive overseas travel and complexities of dealing with local labor and governments, are making US companies consider moving work closer to home.
Nearshoring is a form of outsourcing that brings work closer to the parent company’s country or time zone. The problem with U.S. companies moving work from Asia to Mexico is the danger and political instability existing in Mexico today. About.com www.outsourcing.about.com/od/nearshoring/Nearshoring.htm
Costa Rica or other Latin American countries may be a better option with less violence, but the time zone and travel costs can be higher.
“A surprising amount of work that rushed to China over the past decade could soon start to come back—and the economic impact could be significant,” said Harold L. Sirkin, a BCG senior partner and lead author of the analysis. “We’re on record predicting a U.S. manufacturing renaissance starting by around 2015. Now we can be more specific about which industries will return and why.” Boston Consulting Group http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-88775
On top of this, foreign-based companies are also picking up on the benefits of nearshoring or outsourcing work to a U.S. location to be closer to their customers; and to take advantage of the available labor force and potential tax breaks.
“India’s outsourcing giants — faced with rising wages at home — have looked for growth opportunities in the United States. But with Washington crimping visas for visiting Indian workers, some companies such as Aegis are slowly hiring workers in North America, where their largest corporate customers are based. In this evolution, outsourcing has come home.” Washington Post www.washingtonpost.com/business/as-indian-companies-grow-in-the-us-outsourcing-comes-home/2011/05/17/AFZbrp7G_story.html
There are U.S. based entrepreneurs meeting the demands of global companies for specialized products, like chopsticks.
“Inspired by his Asian background, an American entrepreneur is turning central Georgia into a fast-growing, job-creating region that makes four million sets of the utensils each week. Jae Lee, a U.S. citizen originally from South Korea, says his company is America’s only chopsticks manufacturer and exports them to China and Japan. Lee started Georgia Chopsticks earlier this year in a town called Americus, population 17,000. He said that his 102 employees can’t keep up with demand from hungry Asians. As a result, he has plans to expand dramatically, hiring an additional 800 workers next year.” Money www.money.cnn.com/2011/12/02/smallbusiness/georgia_chopsticks/index.htm
Think about it—nearshoring—inshoring—outsourcing, and building strategic partnerships for work, services and growth.