With the ongoing economic squeeze businesses are searching to reduce operating costs to provide greater profit for financial gain by outsourcing drafting labour in the search for business growth, share holder returns and various other reasons. One method that appears, to potentially provide a reduction in costs (at least on the surface), is labour by outsourcing offshore to lower cost labour.
This short term gain approach, in my opinion quite a flawed belief, with a devastating cost to the country that outsources. Here is a list of obvious pro’s and con’s that have been established to date:
- Potential for labour cost reduction for short term profit gain.
- New and different skill bases can be optimized into your workforce.
- Funds leave the country of manufacture never to be recycled back into purchasing the product that is manufactured.
- A large element of trust is required with differing beliefs and standards.
- Different laws apply which cannot be applied in the country of manufacture. If something goes wrong there is no, or limited recourse.
- Set up and establishment costs
- Language complications and misinterpretation of crucial information.
- Quite often workers from reduced labour offshore resources have differing work ethics, and often do not apply a dedicated, efficient and as fast approach as western countries like to do.
- Country of manufacture job losses can be substantial, as has been experienced in Australia.
- Country of consumption (Australia) job losses mean no money to spend on the manufactured product.
- No hands on communication or information transfer. Margin for error is increased dramatically
- Needless to say I am not a fan of offshore labour outsourcing, purely an only because of the economic damage and flow on effects it does to the country of manufacture. I do however admire the skill and drive of many offshore employees when working on developing projects, but if they were to do the same, their country would also suffer as a result.