We are in the midst of our survey into outsourcing and global sourcing. Partly, this is in response recent trends, but is outsourcing only one way?
If you are interested in hearing more about the research, please follow this link.
One respondent to our survey already believes that outsourcing “has had its day”. We have heard many talk about in-sourcing and on-shoring for a while now. It seems the most high profile business topic that retains interest in current affairs.
There are particular, one-off examples that fuel this focus. Wal-Mart has publicly pledged to return $50 billion of offshored spend back to the US. Lenovo, the Chinese inheritor to IBM’s former laptop business, is opening a new production facility in the US.
This attracts a lot of attention. But a few instances do not make a trend.
We have been surveying for such activities frequently over the last years. It is still a very rare activity within the world of procurement. More outsourcing and more offshoring is still the flavour of the month.
It seems be to a taste that CPOs will savour for the foreseeable future.
The tide has yet to turn. But does this skew the conversation? As opposed to outsourcing, which is the de fact emphasis, should we be talking about ‘rightsourcing’, which may lead to increasing the provision of external spend.
This is an important distinction. There is a balance that must be struck between the loss of control in outsourcing and the potential costs savings. Similarly, there is a similar balancing act to strike between the disruption caused by insourcing and the scale benefits that this may bring in scale. In each particular context, there is a particular balance which is right for the company. There is not, as many seem to maintain, an inevitable marched towards vertical disintegration.
It is surprising to see, even in the responses we have been fielding so far, that this view is not commonly held within purchasing.
We hope to going into more depth on these issues in the coming weeks and months. To find out more, click here.