Wednesday, September 8, 2010

Challenges of Off-shore Outsourcing

Outsourcing is a common corporate cost-cutting strategy. Many of us live in fear of losing our jobs to call-centers located in other parts of the world, or cheaper, imported products.

It's not going away any time soon.

When it comes to manufacturing, outsourcing key components can be especially troublesome. If, on the other hand, the component is established, supply is stable, and multiple sources are available, out-sourcing may not be much of an issue.

When problems crop up, as they invariably do, accessibility to the supplier is the key to finding a solution quickly and painlessly. There are many reputable companies worldwide, but, hey, let’s face it. Communicating with a company a few time zones away is difficult enough. As the number of time zones goes up, communication becomes almost impossible. I haven't seen any scientific data, but for every increase in time zones, I'll bet there is a corresponding increase in difficulty of communicating with the supplier. Anyone care to hazard a guess? Does it double? Triple? Quadruple?

Off-shore outsourcing gets complicated very quickly. Tariffs and trade restrictions change fast, and you practically need a legal department to stay on top of things. Cultural differences and language barriers add a whole new level of complexity.

The bottom line is, if delivery and consistency are important, keep it in-house.

If it is one of your core competencies, don’t even think about out-sourcing it.

Anything else is fair game.

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