Outsourcing and Offshoring Boom Checked by Rise in Labor Costs in India and China, 6-5-2008
Outsourcing will be an approximately $500 billion global industry in 2008, with the largest portions created in three broad areas: 1) logistics, sourcing and distribution services; 2) information technology services, including the creation of software and the management of computer centers; and 3) business process outsourcing (BPO) areas such as call centers, financial transaction processing and human resources management. Offshoring, on the other hand, covers such a wide variety of nations, products and practices that it would be difficult to put a number on it. A significant share of offshoring revenue is created by contract manufacturing of electronics, laptop computers, cellular telephones and consumer electronics such as iPods. Another major sector in offshoring is contract manufacturing of shoes, apparel and accessories. Competition in the industry is fierce and many changes have been affecting the landscape in this turbulent sector. Some examples are:
1) Health Care Goes Offshore, Private Clinics Thrive in China and India.
Many people might assume that certain professions could never be outsourced, such as the work of health care professionals. This is apparently not true.
2) Globalization: Explosive Growth in Offshore Apparel Manufacturing.
In a World Bank estimate, China could control close to 50% of the world’s clothing market by 2010, significantly up from its 17% share in 2003.
3) Outsourcing & Offshoring in Eastern Europe, South America and the Middle East on the Rise.
As wages rise in India and China and hiring becomes more difficult or more expensive, some firms seeking outsourced services providers are turning to other countries such as those in Eastern Europe, which offer certain advantages.
To find out more about these exciting trends and others, check out Plunkett’s Outsourcing & Offshoring Industry Almanac 2009, or go to www.plunkettresearch.com and sign up for a subscription to Plunkett’s completely up-to-date online database!
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