The Future Of Outsourcing

Traitor. Turncoat. Job Killer. These are just a few of the more polite names that are thrown around when CEOs decide to go with an outsourcing solution rather than keep the work inside of the country. But this article from Bloomberg BusinessWeek shows, outsourcing can be a strategic asset that allows for internal growth in companies. Take for example the story of Paper Converting Machine Co. (PCMC): after having fallen on hard times, the company has managed to spring back through outsourcing design work to India. This allows them to slash designing costs and keep production in Green Bay. PCMC's strategic use of outsourcing to keep jobs within its own country isn't an easy idea to put trust in, but outsourcing can allow for a leaner, more driven company. This is called “transformational outsourcing”: The changes can be harsh and deep. But a more enlightened, strategic view of global sourcing is starting to emerge as managers get a better fix on its potential. The new buzzword is “transformational outsourcing.” Many executives are discovering offshoring is really about corporate growth, making better use of skilled U.S. staff, and even job creation in the U.S., not just cheap wages abroad. True, the labor savings from global sourcing can still be substantial. But it's peanuts compared to the enormous gains in efficiency, productivity, quality, and revenues that can be achieved by fully leveraging offshore talent. Outsourcing is no longer just about labor costs (or about labor costs at all) – it's become a way to rapidly expand the business and refocus efforts on profitable innovation while securing day-to-day activities are completed. Furthermore, outsourcing companies are able to ramp up large scale efforts quickly, allowing for turn-on-a-dime responsiveness by companies which previously could spend months getting ready for an effort.  

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