Future of Sourcing - Asia/Pacific https://futureofsourcing.com/regions/asiapacific en 7 Reasons Why India and Southeast Asia are Promising Sourcing Alternatives to China https://futureofsourcing.com/7-reasons-why-india-and-southeast-asia-are-promising-sourcing-alternatives-to-china <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/India-Southeast-Asia.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/India-Southeast-Asia.jpg" title="Buyers can no longer depend on just one country for all their sourcing needs." class="colorbox" rel="gallery-node-2212-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/India-Southeast-Asia.jpg?itok=T0zI0V2g" width="624" height="325" alt="Buyers can no longer depend on just one country for all their sourcing needs." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>Today, buyers can no longer depend on just one country for all their sourcing needs says Aditi Pany, CEO of <a href="http://qalara.com/" target="_blank">Qalara.com</a></em><em>. </em><em>She offers detailed insights into the strong benefits of sourcing from this region and why it makes for a sound business decision.</em></p> </div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The south and southeast regions of Asia comprising nearly 19 countries, including India, Indonesia, Vietnam and Thailand among others, have a rich history of production and trade going back thousands of years. In fact, historians believe that the world&rsquo;s first long distance trade occurred between Mesopotamia and the Indus Valley (Indian subcontinent) in 3,000 BC, centered around textiles, spices, jewelry and artifacts.</p> <p>While China has been the undisputed manufacturing epicenter for decades now, in recent times, export manufacturing in this part of the world has seen tremendous evolution and a renewed gusto. Today, Bangladesh, Vietnam and India are among the top five textile exporters in the world. India is the largest producer and exporter of spices in the world while Thailand and Indonesia are the top two exporters of rubber products, covering nearly 55% of all exports in this category worldwide.</p> <p>This growth has been driven by a number of factors that will continue to strengthen the crucial role of this region in global trade in the coming decades. Here are some key levers that are increasingly making these countries viable sourcing options aside from China.</p> <h1>1. Rising Labor Costs in China</h1> <p>China&rsquo;s wages have increased multifold since 2011, resulting in a minimum wage difference of up to 50% compared to countries such as Indonesia and parts of India. At the same time, labor policy reforms, productivity improvements due to better infrastructure and machinery, and the access to a huge workforce positions these countries as an attractive alternative.</p> <h2>2. Rapidly Evolving Manufacturing Support Ecosystems Powered by Digitization and Economic Development</h2> <p>The growing strength of domestic markets in these regions and the deep penetration of digitization in their economies has benefited the manufacturing ecosystem. Massive strides in payments, innovation and reach of domestic logistics and packaging as well as an improved digitally enabled visibility of the production floor have given rise to better services, lower investment costs and a digitally savvy manufacturer base. This in turn positively impacts the cost, quality competitiveness and transparency in these countries.</p> <h2>3. Lower Tariffs With Growing Free Trade Agreements</h2> <p>The countries in these regions have been actively and successfully negotiating free trade or preferential trade agreements with the western countries in the last few years. These have resulted in steadier and lower duties and tariffs, especially compared to China in recent times. For instance, Vietnam signed a comprehensive trade agreement with the European Union (EU) in 2020 while India and the EU have set up a high-level Trade &amp; Technology Commission to strengthen ties.&nbsp;</p> <h2>4. Big Focus on Sustainable and Eco-Friendly Production</h2> <p>With their tropical geographical locations, these regions of Asia have been endowed with natural resources across a variety of materials including wood, bamboo, stone, marble, and metals such as copper and brass. The local artisans who possess centuries-old rich craftsmanship cleverly convert these natural materials into everyday objects incorporating modern design sensibilities. There is an incredible amount of product innovation using natural materials taking place in India, Vietnam and Indonesia. With an increasing awareness and demand for eco-friendly products, these regions will play a huge role in the move towards a sustainable global supply chain and consumption.</p> <h2>5. Low Minimums Enabling New Brands, Wider Selection and Less Waste</h2> <p>Two of the current big global retail trends are (a) the growing share of small and medium-sized brands in retail due to the democratization of digital distribution led by e-commerce platforms and (b) the growing importance of e-commerce as a key channel for sales.</p> <p>Both of these trends require a global supply chain that is able to manufacture low minimums with quick turnarounds to support new brands and enable their breadth of selection online. Given the inherent labor-intensive nature of production in these countries, manufacturers are often willing and able to produce goods, including private labels, at lower minimums compared to China.</p> <h2>6. Bridging of the Information Asymmetry</h2> <p>In the past, China has been in the lucrative position of intimate access to product, pricing and trends because it has been the epicenter of manufacturing for the world&rsquo;s plethora of global brands. However, in this new age of information, the pervasiveness of social media, digital commerce, the global gig economy and even digital trade fairs have given manufacturers in these countries easy access to insights on the latest trends, pricing, seasonal merchandising and much more. They are able to quickly adapt and put out exciting product ranges at the right prices and right time like never before. It&rsquo;s a relatively better level playing field than ever before.</p> <h2>7. Growing Ease of Access to the Manufacturers and Suppliers, Digitally and Affordably</h2> <p>While Alibaba.com was the pioneer in cross border B2B e-commerce, today India and the Southeast Asian regions have a growing share of their own digital B2B marketplaces and platforms. These platforms are curating and consolidating vetted supplier bases, while plugging the gaps to drive efficiencies and reliability in quality, global logistics, global payments and more, making it easy for businesses around the world to discover and source from them remotely, conveniently and affordable.</p> <p>While there is still a long way for this region to catch up with China in terms of infrastructure, pervasiveness of advanced machinery, global supply chain ecosystem and the trade knowledge, India and the southeast Asian countries have unique advantages that make a compelling argument for big and small retailers, importers and brands to strongly consider devising sourcing strategies beyond China to give their businesses a competitive edge.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/environmental-and-social-governance-esg-0" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Environmental and social governance (ESG)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Outsourcing</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="7 Reasons Why India and Southeast Asia are Promising Sourcing Alternatives to China - Future of Sourcing" addthis:url="https://futureofsourcing.com/7-reasons-why-india-and-southeast-asia-are-promising-sourcing-alternatives-to-china"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Mon, 08 Aug 2022 02:00:00 +0000 Aditi Pany 2212 at https://futureofsourcing.com https://futureofsourcing.com/7-reasons-why-india-and-southeast-asia-are-promising-sourcing-alternatives-to-china#comments Sourcing Disruption to Continue In 2022 https://futureofsourcing.com/sourcing-disruption-to-continue-in-2022 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Sourcing%20Disruption%20to%20Continue%20In%202022%20%20Breteau.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Sourcing%20Disruption%20to%20Continue%20In%202022%20%20Breteau.jpg" title="While 2021 was a bust for many who hoped that supply chain disruptions would abate, it appears the trend will continue well into 2022." class="colorbox" rel="gallery-node-2144-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Sourcing%20Disruption%20to%20Continue%20In%202022%20%20Breteau.jpg?itok=8Fo4AHZ6" width="624" height="325" alt="While 2021 was a bust for many who hoped that supply chain disruptions would abate, it appears the trend will continue well into 2022." title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>While 2021 was a bust for many who hoped that supply chain disruptions would abate, it appears the trend will continue well into 2022 says QIMA&#39;s&nbsp;Sébastien Breteau. He shares recent data that sheds light on sourcing diversification activities in China, Vietnam and India, as well as troubling data on human rights and worker safety.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/five-technologies-to-future-proof-supply-chain-inspections">Five Technologies to Future Proof Supply Chain Inspections</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <h1>Sourcing Disruption to Continue In 2022&nbsp;</h1> <p>A volatile 2021 taught businesses a tough lesson about the fragility of supply chains. Just when many thought we were out of the woods, the promising trends toward recovery reversed. Supply chains quickly snapped amid the resurgence of COVID-19 outbreaks, China&rsquo;s utility crisis, logistics woes, labor issues, and mass supply shortages.</p> <p>In more positive news, consumer demand is strong. Even against records shortages, consumers splurged during the holiday season, and spending hit an all-time high in the United States according to the <a href="https://www.cnbc.com/2021/12/03/holiday-shopping-2021-spending-set-to-blow-past-records-nrf-says.html" target="_blank">National Retail Federation</a> (NRF). After predicting a year-on-year increase of 8.5% to 10.5%, NRF revised this figure to a whopping 11.5%, affirming consumer appetite to spend.</p> <p>However, with supply still short, this means unprepared businesses are missing out on a big opportunity to seize consumer demand.</p> <p>While some of the media headlines positioned the supply chains&rsquo; issues as a &ldquo;<a href="https://www.npr.org/2021/12/13/1063901970/the-toymakers-supply-chain-nightmare-before-christmas" target="_blank">nightmare before Christmas</a>,&rdquo; recent data from QIMA suggests that the disruption is poised to linger long into 2022. Businesses should take note of the following trends, as they are projected to shape the sourcing landscape this year.</p> <h2>China Sourcing Veers Off Track, but Recovery in 2022 is Still Possible</h2> <p>Reflecting a pattern observed in many of Asia&rsquo;s sourcing markets in 2021, China flaunted a remarkable rebound in the first half of the year as it outpaced most other countries in containing the virus.</p> <p>While this success stuttered in Q3 onwards in Asia at large, the world&rsquo;s leading manufacturing market is showing itself to be even more resilient compared to its regional competition. Notably, inspection and audit demand in China exploded +21.5% in 2021 over 2020. This growth even trounced pre-pandemic 2019 by +13%.</p> <p>Unfortunately for China, though, the second half of 2021 proved disappointing for its giant manufacturing industry as widespread power outages shut down factories and stymied orders. Adding salt to the wound, the blackouts happened in September &ndash; just as factories were looking to fill holiday orders from their buyers.&nbsp;</p> <p>However, demand for inspection and audits in China rebounded relatively quickly in most major consumer goods categories, including textile/apparel, toys and homeware. An important exception was the electronics and electricals industry, which has seen inspection and audit demand diminish steadily since May 2021. This is happening as more electronic manufacturers feel the pain of the global semiconductor chip shortage.</p> <p>QIMA data on inspections and audits reflects caution from Western buyers, with buyers being hesitant to expand sourcing in China throughout 2021. Instead of returning to China in droves, the data suggests many buyers simply maintained their existing business relationships with Chinese manufacturers. Subsequently, China&rsquo;s share among the top-five sourcing regions of both U.S.- and EU-based buyers in 2021 remained at a three-year low.</p> <p>China&rsquo;s sourcing patterns in 2021 foreshadow a post-pandemic recovery that, while not being derailed completely, has veered off track. In addition, power outrages may remain a threat in upcoming months. Accompanying this threat, the upcoming Winter Olympics in Beijing may impose further manufacturing restrictions in northern China. Subsequently, while there is reason to be optimistic for China&rsquo;s sourcing footprint in 2022, buyers should nonetheless heed caution and be prepared for further disruption.</p> <h2>Vietnam&rsquo;s Boom and Bust Reflects Buyer Hesitation</h2> <p>The collapse of sourcing in Vietnam in 2021 sheds light on how volatile the modern global sourcing landscape is, revealing the compounding effects of pandemic-related disruptions.</p> <p>In the first half of 2021, Vietnam experienced a tremendous growth spurt as enthusiastic buyers from the West eagerly flocked back to a familiar sourcing market that had been enjoying much attention pre-pandemic. In January through June 2021 &ndash; a period where Vietnam was successfully containing the spread of the virus &ndash; QIMA recorded a robust +67% growth versus pre-pandemic 2019.</p> <p>This rosy success story was interrupted in late July by the arrival of the Delta variant, when the country entered a stifling lockdown period. The latest data from QIMA shows Vietnam&#39;s manufacturing industry remained sluggish through the end of the year, even though the virus containment measures were lifted in October.&nbsp;</p> <p>Sharp labor shortages are likely a factor in Vietnam&rsquo;s slow path to recovery, as factory staff left the cities en masse. This left a shocking shortage of over 100,000 workers in the south of Vietnam. As a result, in late November, over a third of factories in Vietnam were reported to be operating below 80% capacity. In many cases, orders were even being delayed by more than eight weeks.</p> <p>The footwear and apparel sector in Vietnam has been among the hardest hit by the lockdowns and accompanying labor shortages, with inspection and audit demand plummeting -29% year-over-year in the fourth quarter. As a result of this dramatic reversal of fortune, Vietnam inspections and audits grew by a modest 3% in the first half of 2021 compared to the double digit booms it tracked during the pre-pandemic period. Based on this lethargic rebound, Vietnam&#39;s recovery is expected to be gradual and should last well into 2022.</p> <h2>India Enjoys the Benefit of Sourcing Diversification</h2> <p>Even though <a href="https://thediplomat.com/2021/08/the-rcep-conundrum-japan-awaits-indias-return/" target="_blank">India infamously bowed out</a> of the recently launched Regional Comprehensive Economic Partnership (RCEP) free-trade agreement, it&rsquo;s nonetheless experiencing exciting new surges in sourcing. Acclaimed by experts as an increasingly attractive sourcing market among many product categories, recent QIMA data shows buyers are shifting their gaze from China and making India a preferred alternative sourcing market.</p> <p>When comparing 2021 to the pre-pandemic period, the South Asia region at large flaunted double-digit expansion in inspection and audit demand. But India, specifically, has emerged as the conclusive favorite &ndash; outperforming its neighbors and the region as a whole in three out of four quarters of the year.</p> <p>India&#39;s newfound success can be attributed to surging interest among U.S.-based brands by and large: QIMA survey data shows the share of buyers naming India among their top-five sourcing regions nearly doubled in 2021 compared to 2019.</p> <p>After crossing the 2021 finish line with an impressive overall +60% spike in inspection and audit demand compared to pre-pandemic 2019, this figure astoundingly jumped +129% among U.S.-based buyers. Now, the next test for India is whether it can combat the threat of Omicron and keep the momentum going in 2022.</p> <h2>Sourcing Volatility is Wreaking Havoc on Human Rights and Worker Safety</h2> <p>Against the turbulent headwinds of the pandemic, workers around the world face <a href="https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021#:~:text=The%20COVID%2D19%20pandemic%20is,severity%20of%20the%20economic%20contraction.">rising poverty and mass job losses</a> estimated to be around four times that seen during the 2008-2009 global financial crisis, according to a report released last year by the <a href="https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_766949/lang--en/index.htm">UN International Labour Organization</a>.</p> <p>Even though diversification helped many buyers navigate disruptions in the short term, 2021 saw ethical compliance in global supply chains crumble at an alarming rate. Factory scores clocked in at a four-year low and nearly a third (29%) of the factories QIMA audited were identified as being critically non-compliant and in need of immediate intervention. This represents the highest share since 2017.</p> <p>Due to specific challenges presented by the pandemic, violations were unsurprisingly extensive in areas related to health and safety. In this area, 2021 scores dropped -7.5% compared to 2020. QIMA also tracked rampant violations in the area of working hours and wages, with scores dropping -8% in 2021 compared to 2020.&nbsp;</p> <p>By geography, QIMA audit data indeed shows deteriorating ethical scores in many key sourcing markets &ndash; especially in Southeast Asia. For example, Myanmar is among the worst offenders in the world: its 2021 ethical scores plunged -18% compared to 2020.</p> <p>These disheartening trends in human rights and worker safety are perhaps all too unsurprising and familiar. Unfortunately, data from recent years have shown human rights and ethical compliance falling by the wayside more and more as businesses are forced to operate in survival mode, prioritize cost concerns and diversify sourcing to less familiar geographies.</p> <p>We saw ethical compliance drop first during the throes of the U.S.-China trade war. Now the decline in ethical compliance continues to rear its ugly head during the pandemic and the ongoing supply chain crunch.&nbsp;&nbsp;</p> <h2>Looking Ahead</h2> <p>After a devastating 2020, many had placed their bets on 2021 being a year of recovery and a return to the pre-pandemic normal. Despite some glimmers of hope, the year did not live up to these expectations. Moreover, by some measures of sourcing metrics &ndash; such as ethical compliance &ndash; the situation became even more bleak.&nbsp;&nbsp;</p> <p>Amid new COVID-19 variants, disparate vaccination rates and varying regional approaches to virus containment, the pandemic continues to burden global supply chains. When you combine this with the woes of raw material shortages, logistics hurdles, labor issues and rapidly escalating ethical risks, global supply chains are expected to remain volatile throughout 2022.</p> <p>The struggles businesses have faced thus far do not have to be all for naught, as there have been many teaching moments throughout the pandemic. If emerging supply chain trends are kept top of mind, businesses will be able to exercise higher levels of agility and resilience &ndash; and nimbly adapt to the everchanging sourcing landscape.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/compliance" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Compliance</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/qima" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">QIMA</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Sourcing Disruption to Continue In 2022 - Future of Sourcing" addthis:url="https://futureofsourcing.com/sourcing-disruption-to-continue-in-2022"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/north-america" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">North America</a></div><div class="field-item odd"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Thu, 03 Mar 2022 17:00:00 +0000 Sébastien Breteau 2144 at https://futureofsourcing.com https://futureofsourcing.com/sourcing-disruption-to-continue-in-2022#comments New Trends and Challenges For Sourcing https://futureofsourcing.com/new-trends-and-challenges-for-sourcing <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/New%20Trends%20and%20Challenges%20For%20Sourcing.png"><a href="https://futureofsourcing.com/sites/default/files/articles/New%20Trends%20and%20Challenges%20For%20Sourcing.png" title="New Trends and Challenges For Sourcing" class="colorbox" rel="gallery-node-2056-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/New%20Trends%20and%20Challenges%20For%20Sourcing.png?itok=LBX2Mjbf" width="624" height="325" alt="New Trends and Challenges For Sourcing" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>New Trends and Challenges For Sourcing</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/the-three-pillars-of-successful-supply-chain-risk-management">The Three Pillars of Successful Supply Chain Risk Management</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>With the <a href="https://www.wsj.com/articles/global-recovery-accelerates-but-delta-variant-clouds-outlook-11627034563" target="_blank">COVID-19 Delta variant threatening pandemic recovery</a> around the world, brands that source products globally are facing supply chain challenges in a business landscape mired by transit limitations, factory shutdowns, surging shipping costs, delays, labor shortages and rampant supply shortages. As brands shuffle to meet volatile consumer demand, recent data on <a href="https://www.qima.com/qima-news/2021-q3-barometer-china-recovery-slows" target="_blank">inspection activity</a> and digital transformation initiatives outline the most recent trends that are reshaping sourcing and supply chain strategies.</p> <h2>Virus Resurgence Threatens China&rsquo;s Remarkable Rebound</h2> <p>Building on momentum after a promising first quarter, China&rsquo;s sourcing footprint continued to gain ground through the second quarter and recorded growth that exceeded 2019 levels, according to a <a href="https://www.qima.com/qima-news/2021-q3-barometer-china-recovery-slows" target="_blank">quarterly inspection and audit report.</a></p> <p>Demand for inspections and audits in China expanded by a colossal 34% year-over-year (YoY) in the second quarter of 2021, which represents 21% growth when compared to the same time period during 2019 &ndash; long before the COVID-19 pandemic tore apart global supply chains.</p> <p>However, with the world still entrenched in the pandemic and all eyes on the Delta variant, China&rsquo;s stunning rebound is putting a gentle foot on the brakes. The pace of expansion decelerated through the second quarter, slowing from 25% growth in April (compared to 2019 figures) down to 20% growth in May and then 17% growth in June.&nbsp;</p> <p>Unfortunately for China, the interest of Western buyers in its sourcing largely follows the same downhill trend &ndash; especially for North American buyers. While demand from U.S.-based brands for inspections in China was up by 10% in the second quarter (when compared to the second quarter of 2019), the pace of the rebound has also been losing steam on a month-to-month basis.</p> <p><span style="font-size: 13.008px;">While China&rsquo;s rebound in sourcing has been remarkable, it is worth noting that the recovery has not touched all consumer goods industries the same way. For example, while homewares and electronics recorded double-digit YoY growth in the first half of 2021 (compared to both 2020 and 2019), inspection and audit demand is still trailing behind pre-pandemic levels in some of the country&rsquo;s key sectors, such as eyewear and the clothing (textile and apparel) industries.&nbsp;&nbsp;</span></p> <h2>Sourcing Demand in South Asia Skyrockets</h2> <p>After a disastrous 2020, when clothing brands sat on mountains of <a href="https://www.ft.com/content/f030f125-0a15-4097-bb5f-4b0543544ec3" target="_blank">unsold inventory worth billions of dollars</a>, the textile and apparel sector is in comeback mode. As consumers emerge from quarantines and reenter public spaces, the clothing industry has compensated for its aforementioned reduced interest in China with continued expansion through various sourcing markets elsewhere in Asia.</p> <p>In particular, South Asia&rsquo;s established markets are recording explosive growth, with demand for inspections in textiles and apparel up 81% in India and 66% in Bangladesh in the first half of 2021 when compared to pre-pandemic 2019, according to the quarterly inspection and audit report.&nbsp;</p> <p>Growing demand for textile inspections was also recorded in markets of Southeast Asia (including Cambodia, Indonesia and Vietnam), South and Latin America (including Mexico, Haiti and Guatemala) and the Mediterranean (including Turkey, Morocco, Jordan and Egypt). Markedly, while the latter region has traditionally been favored as a sourcing market for European-based buyers, the second quarter of 2021 saw it recording an uptick in inspections and audits from U.S. buyers.</p> <p>The growth in these alternative markets suggest that brands remain focused on diversifying sourcing from new markets to circumvent sustained pandemic delays and alleviate uncertainties about the future.</p> <h2>Soaring Demand from Western Buyers</h2> <p>As the sourcing industry in multiple sectors and regions continues to defy the pandemic slump and vigorously climbs upward, some markets in Southeast Asia are benefiting from exceptionally high buyer interest. For example, Vietnam, Cambodia, Indonesia and Thailand all recorded double-digit growth in demands for inspections and audits in the second quarter, according to the quarterly inspection and audit report.</p> <p>Cambodia, in particular, remains high on the list of go-to alternative sourcing markets for U.S. buyers. In the second quarter of 2021, volumes for inspections and audits in Cambodia shot up nearly 100% compared to 2020; when compared to pre-pandemic 2019, 2021 volumes in the second quarter still represented a 23% YoY increase.</p> <h2>Digitization Illuminates Blind Spots and Enhances Quality Control</h2> <p>Up to 77% of companies admit to having sourcing blind spots in their supply chains, according to a recent survey of global brands from our digital and technology division QIMAone, and two-thirds report that they don&rsquo;t have streamlined communications in place with their suppliers.</p> <p>When you couple this lack of transparency with supplier delays &ndash; like we continue to see amid pandemic disruptions &ndash; it spells out disaster for a brand&rsquo;s sourcing footprint. Inevitably, to be successful, brands must illuminate these blind spots and achieve end-to-end supply chain visibility, particularly in the inspection process.</p> <p>Being successful on this front may require a shift in operational priorities, however. While pricing and perceived value have traditionally been seen as the main drivers of consumer trends, brands may be surprised to learn how influential quality measures are on the bottom line too. Poor quality costs can add up heftily and account for up to <a href="https://asq.org/quality-resources/cost-of-quality" target="_blank">40% of operational expenses</a> when there&rsquo;s an underlying problem.</p> <p>Moreover, some brands may be unprepared to level up quality control programs in an evolving consumer marketplace. According to a <a href="https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer-sentiment-during-the-coronavirus-crisis" target="_blank">recent survey on consumer sentiment</a>, product quality was found to be a key driver for 40% of younger consumers, suggesting that the focus on quality will continue to sharpen into the future.</p> <p>Considering the mounting prominence of quality, the case for sourcing digitization is quite compelling: 14% of brands say that product quality issues have a &ldquo;very serious impact&rdquo; on their business; but for those with highly digitized supply chains and sourcing processes, this number is cut down to just 7%.</p> <h2>Looking Ahead: Balancing Diversification With Compliance Objectives</h2> <p>Unfortunately, according to historical inspection and audit data, a sudden surge in export volumes has brands diversify sourcing markets &ndash; such as what we&rsquo;re seeing in South Asia and Southeast Asia &ndash; often comes at the cost of quality and ethical missteps, including compromised worker safety.</p> <p>This correlation is once again rearing its ugly head as brands try to move to the other side of pandemic recovery, according to data gathered by structural engineers during field audits at reopened factories. Among the factories inspected for structural, fire and electrical safety thus far in 2021, two-thirds were found in need of remediation, according to the quarterly inspection and audit report. Fire safety was a particularly dire concern, with over half of the factories audited in the first half of 2021 requiring improvements in the near term.</p> <p>Meanwhile, ethical compliance overall continues to plummet at an alarming rate, with average ethical scores dwindling by a further 4% (when compared to the first quarter of 2021) to scrape a three-year low. These troubling figures show that the ongoing specter of the pandemic &ndash; as factories globally struggle to reorganize, recoup and adapt to volatile consumer demand cycles &ndash; threatens to undo much of the pivots and improvements that brands made toward ethical supply chains in the pre-pandemic period.</p> <p>To forge ahead safely and responsibly in today&rsquo;s uncertain sourcing landscape, brands must prioritize human rights, environmental sustainability and quality in their recovery programs &ndash; or risk facing costly lawsuits, hefty fines, operational inefficiencies and irreparable brand damage.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/china" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">China</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/qima" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">QIMA</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/compliance" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Compliance</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digitalization" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digitalization</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="New Trends and Challenges For Sourcing - Future of Sourcing" addthis:url="https://futureofsourcing.com/new-trends-and-challenges-for-sourcing"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Wed, 22 Sep 2021 02:00:00 +0000 Sébastien Breteau 2056 at https://futureofsourcing.com https://futureofsourcing.com/new-trends-and-challenges-for-sourcing#comments How Supply Chains Should Adapt to the Trade War “Truce” https://futureofsourcing.com/how-supply-chains-should-adapt-to-the-trade-war-truce <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Trade_Wars_624x325.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Trade_Wars_624x325.jpg" title="How Supply Chains Should Adapt to the Trade War “Truce”" class="colorbox" rel="gallery-node-1349-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Trade_Wars_624x325.jpg?itok=eHWNJ8UN" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div>On December 1, leaders from China and the U.S. broke bread with their enemies and reached consensus to halt the mutual increase of further tariffs until March 1, 2019. As of now, the total U.S. tariffs applied exclusively to China is at $250 billion, and China answered back with $110 billion worth of tariffs on U.S. goods. The &ldquo;truce&rdquo; has prevented the January 1 deadline for most tariffs to increase from the current 10 percent to the established 25 percent.&nbsp;</div> <div>&nbsp;</div> <div>This 90-day grace period is an opportunity for companies to reassess their procurement and strategic sourcing initiatives. Worried, many wonder how this truce will affect their American supply chains and what they can expect in the near future. Taking that into consideration, the truce itself will do little to stem the proactive strategies in place until a concrete solution can be agreed upon by both the Chinese and U.S. governments. However, companies can take advantage of the temporary cease fire.&nbsp;</div> <div>&nbsp;</div> <div>On the supplier side, this pause has given a brief respite for the producers of raw materials and intermediate goods. Unfortunately for many companies and suppliers, the new tariffs imposed this year on imported steel and aluminum will remain at 25 percent. These two direct materials have widespread use throughout manufacturing and the truce has made no major changes to this market. &nbsp;</div> <div>&nbsp;</div> <div>Therefore, this will not impact one of the more popular strategies, which would be to move production out of China to low-cost countries or the U.S. Most likely, low-tech products and low-value manufacturing will be the first to migrate to these countries, but high R&amp;D costs and more competitive labor costs could delay other manufacturing categories such as pharmaceuticals, machinery and IT. These moves can take months or years to complete before production can resume at full capacity. If so, the grace period would be irrelevant in the grand scheme of things. For some American energy and agricultural products, China has resumed importation. This is the main area of immediate benefits in which some agricultural goods can ramp down their risk mitigation strategies and continue to use the Chinese market. However, one large agricultural good that will continue to be tariffed at 25 percent is <a href="https://edition.cnn.com/2018/12/03/business/trade-war-business-china/index.html" target="_blank">the soybean industry</a>. Similar to the steel and aluminum industry, this truce will have little to no consequences to the supply chains of soybean producers.&nbsp;</div> <div>&nbsp;</div> <div>Likewise, the distribution network that is the lifeline of American supply chains will also be virtually unaffected by the grace period. Already, the trade war has shifted ocean freight away from China to such low-cost Asian countries as Vietnam, where shipments from ports there <a href="https://www.forbes.com/sites/kenrapoza/2018/12/10/trade-war-update-china-subverts-tariffs-trade-gap-gets-wider/" target="_blank">increased 165.4% in 2018</a>. This development is likely not to change due to the lengthy lead time necessary to sufficiently maneuver in the logistics space. Much of the real estate endeavors in low-cost countries have already tied up capital and companies would be ill-advised to revert their distribution positions during this relatively short-term ceasefire. Nonetheless, during this period, companies can ramp up logistic efforts, such as faster shipment deliveries or more quantitative shipments that they would otherwise forego with the earlier established tariff rate increase.&nbsp;</div> <div>&nbsp;</div> <div>In the case of retailers, even if the truce is in place, it will not have concrete measures to remove any of the underlying tariffs affecting retailers, especially for consumer-level goods. With the large scope of consumer products impacted by the tariffs, it is expected that retailers will accommodate soaring import costs by passing it on to consumers. But this grace period, coupled with the current holiday season, will not increase prices for some time for retailers and consumers alike. For consumers, the trade truce does not mean their purchases will become cheaper; it just means that their purchases will not necessarily get more expensive. Potentially, demand could increase as consumers, bolstered by the news of the grace period, take advantage of the current prices before the status quo is impacted by the end of the truce. Even if the Chinese government can find ways to boost the purchase of American goods, it cannot determine the behavior of American consumers. Consumers may be eager to buy Chinese goods if only to get hold of products before relations deteriorate and further actions disrupt their purchasing behaviors.&nbsp;</div> <div>&nbsp;</div> <div>For most companies, the time scale of this truce will not line up perfectly with their long-term objectives, but it does allow room for further negotiations and changes to take place. Companies should remain diligent and allow for as much flexibility in their supply chain strategies to ensure that their decisions will not be on the wrong end of the table. American companies must consider recent surrounding events. On December 5, Canadian officials at America&rsquo;s behest arrested Meng Wanzhou, the chief financial officer of Huawei, a Chinese manufacturer of telecom equipment. This act has negatively impacted the relationship between China and the U.S., possibly unraveling this ceasefire just like the second round of tariffs immediately <a href="https://www.bbc.com/news/business-44346461" target="_blank">cut short trade talks back in May</a>. As the bread stales, the result of this truce period will have larger ramifications than the truce itself for companies, their supply chains and their strategies going forward.</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/tariffs" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Tariffs</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/trade" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Trade</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supplier-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/manufacturing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Manufacturing</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="How Supply Chains Should Adapt to the Trade War &amp;ldquo;Truce&amp;rdquo; - Future of Sourcing" addthis:url="https://futureofsourcing.com/how-supply-chains-should-adapt-to-the-trade-war-truce"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Tue, 15 Jan 2019 21:04:11 +0000 Michael Vu 1349 at https://futureofsourcing.com https://futureofsourcing.com/how-supply-chains-should-adapt-to-the-trade-war-truce#comments Back to the Future...of Outsourcing! https://futureofsourcing.com/back-to-the-futureof-outsourcing <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/medical%20automation%20624x325.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/medical%20automation%20624x325.jpg" title="Back to the Future...of Outsourcing!" class="colorbox" rel="gallery-node-1011-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/medical%20automation%20624x325.jpg?itok=-VTkm1v3" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>To understand the future, it often helps to examine the past. The past may not have all our answers, but we often find useful models that can be repurposed in new ways. Turn back the clock one hundred years, and we will find just such a model for future outsourcing&hellip;the modern hospital.</p> <p>Hospitals have been around for millennia. Early hospitals had few effective medicines. Instead, they were more like rest camps. Still, the best hospitals were relatively clean and they were often built by a mountain or a lake where patients had clean air and fresh water. Removed from a polluted city and its contaminated water, and given regular meals, a patient had a much better chance to recover.</p> <p>Prior to the turn of the last century, &ldquo;intensive care&rdquo; meant little more than sawing off infected limbs. Hygiene was a bit of a mystery to the medical staff, and the operating room was often fatal. Still, with a little luck, someone may have just gotten better. By the mid-1800s medicine became &ldquo;scientific&rdquo; and the rate of recovery for patients slowly improved. By 1920, a hospital had a 50/50 chance of improving your condition.</p> <p>As hospitals improved, health improved in hospitals, and across every developed nation. Infectious diseases&mdash;cholera, diphtheria, tuberculosis&mdash;were the primary causes of death in the early 20th century. Hospitals joined with departments of sanitation and medical colleges, and by the mid-20th century, infectious diseases began to disappear in developed countries. Hospitals turned to more complex medical challenges...heart disease, cancer and genetic research.</p> <p>To meet these new challenges, hospitals needed to retool. Early hospitals had a lot of beds, trained staff and operating rooms and labs had many test tubes and Bunsen burners&hellip;but conquering cancer required more advanced medicine and sophisticated diagnostic equipment.</p> <p>X-rays were one of the first miracle machines. Doctors could now look inside patients without cutting them open. Ultrasound, MRI and PET scanners soon followed and the inner workings of human biology became an open book. To cure cancer, radiation equipment, cryotherapy and many other devices were invented. Hospitals were soon filled to the brim with futuristic equipment.</p> <p>Doctors and nurses, however talented, were not trained to deal with this sophisticated equipment. With too many multi-million dollar pieces of equipment to count, hospitals needed help to maintain and repair their&nbsp;fleet of medical devices. Some equipment, especially in nuclear medicine, requires special care in its use and in the disposal of radioactive components, and, of course, this technology requires extensive training. Tools like the &ldquo;Gamma Knife&rdquo; (a knifelike beam of radiation), can cure if correctly used, but can also do great damage when operators are not properly trained. With life and death consequences, outsourcing is essential!</p> <p>Containing all this equipment and providing room for the volume of patients needed to keep these expensive devices fully occupied forced hospitals to grow even larger. Typical hospitals contain multiple buildings and thousands of workers. These &ldquo;Super-Hospitals&rdquo; have become campus-wide structures, with power plants, warehouses and immense parking lots to keep the hospitals running and fully stocked.</p> <p>&ldquo;Super-Hospitals&rdquo; are incredibly capable, but even they need help as medicine has begun to peer into humanity&#39;s own genetic code. Healthcare is now dominated by clusters or networks of organizations that work together to cure patients&mdash;government agencies, insurance groups, education and certification bodies, specialty clinics and (most recently) data outsourcers&mdash;using tools like IBM&rsquo;s Watson to develop insights into medical care and personalized treatments.</p> <p>Very impressive! But exactly how does the evolution of the hospital predict the way that outsourcing will evolve? Let&rsquo;s take a look, starting with...</p> <p><strong>Last Generation Outsourcing:</strong>&nbsp;Until very recently, outsourcing was driven by lower wages in common offshore locations, such as India and China and typically meant moving from a relatively sophisticated work environment to a less sophisticated one. An offshore factory had less automation and equipment than an onshore factory. Buying all of that equipment offshore raised the cost of operation, increased capital investments and slowed down implementation.</p> <p>Instead, companies chose to hire more people offshore than they had onshore. It meant working in a different way, but the results often satisfied all parties. Remember, offshore nations allowed us to work in their country because we provided employment. Money spent on equipment (that was manufactured in another country) did not help the offshore economy. Besides, when offshore wages are one-fifth of onshore wages, you could hire two workers for every one you had onshore, and still be ahead financially.</p> <p><strong>50/50 Chance:</strong>&nbsp;Early on, outsourcing was unreliable. Some projects worked well and some didn&rsquo;t. &ldquo;Lift and shift&rdquo; alone failed. When outsourcing exploded in size at the turn of the 21st century, outsourcers had variable results. Around this time McKinsey, both the world&rsquo;s largest consulting firm and an early outsourcer, stated that only 50% of outsourcing was successful. Failures often arose from skipping necessary steps, lack of specific skills and unreasonable expectations.</p> <p>Now outsourcing&hellip;at least when a reputable outsourcing firm is used&hellip;is better understood and generally more successful. Yet, there remains a nagging sense that some forms of outsourcing, especially for knowledge work, just won&#39;t be successful offshore. At the very least, it is more difficult to convince some customers that they can perform work offshore rather than onshore.</p> <p><strong>Proximity:</strong>&nbsp;Intelligent automation and robotics diminish the role of wages in outsourcing. Automation delivers products with few or no wage earners. The more we automate business functions, the lower the total cost of production. We&rsquo;ve also learned that when we offshore, wages eventually rise. Offshore wages rise far faster than onshore. The cost of automation, on the other hand, falls over time.</p> <p>We are now at the beginning of an onshoring wave. Athletic shoe manufacturers were a big part of the offshoring culture of past decades. Athletic shoes and athletic clothing aggressively moved offshore, leaving little production onshore. Automation makes onshore manufacturing viable. By being onshore, manufacturing not only meets the price of offshore, but can also add&nbsp;<strong><em>new value</em></strong>.</p> <p>Work can be sent halfway around the world efficiently, but it adds to turnaround time. When the next iPhone is released, orange might be the most popular color, but if there aren&rsquo;t enough orange phones on hand, a request can be sent to an offshore factory for orange phones. Total turnaround time to produce new parts, assemble the phone and ship them back to the customer? A month or more. By then, the buyer might give up and buy a different phone.</p> <p><strong>Size:</strong>&nbsp;When manufacturing was outsourced to China, the scale of outsourcing changed. The U.S. and Europe already had big factories, producing cars and airplanes. In the last decade, China built over 500 new cities (capable of supporting a million citizens). These cities were created to house the workers needed by new factories. Factories and related networks of factories (bicycle factories built next to bicycle tire factories) took on a new scale in China.</p> <p>This scale of operations not only created big single-use factories, but has also created a new type of outsourcing. Foxconn corporation is the world&#39;s largest private employer and is based in China. What does Foxconn do? They assemble consumer electronics. They don&rsquo;t build CPUs, or memory chips or circuit boards. They just assemble the parts into a phone for almost every cell phone in the world. They also assemble a huge percent of the computers, tablets, flat screens and other electronics that consumers buy.</p> <p>By assembling every possible type of cell phone, Foxconn developed unique expertise in phone assembly. When a new iPhone is released, Apple&#39;s marketing campaign has publically announced (very tight) release dates. This has been amazingly effective in marketing the iPhone, creating huge lines at Apple stores when a new iPhone is released. Samsung&rsquo;s Galaxy and other top-tier phones are now released in the same way. Without the massive capacity of Foxconn, this would not be possible. Assembly firms like Foxconn didn&rsquo;t exist a decade ago, but now many products cannot exist without them. We&rsquo;ll get back to Foxconn in just a little bit.</p> <p><strong>Technology:</strong>&nbsp;As discussed earlier, when work moved offshore, key equipment and technology were left behind. This reduced the time to ramp up and required less investment to implement. It took more people offshore to replace a team onshore, but if wages were low enough it still made financial sense.</p> <p>To understand relative levels of technology between the U.S. and China, consider the &quot;robot ratio,&quot; or the number of robots per 10,000 workers. In early 2016, China had 36 robots for every 10,000 workers. Today, China may have as many as 50 per 10,000. The U.S. has 175. As you can see, workers in China have quite a disadvantage. Still, you can see that China is quickly catching up. By the early 2020s, China will pass 100 robots per 10,000. However, the world&rsquo;s robotic leader is South Korea, with 530 robots per 10,000 workers. That tells us that there is a LOT of room for automation even with just existing technology.</p> <p>China is investing heavily in robots. It is already the world&rsquo;s largest buyer of industrial robots, and is investing in its own domestic robot industry. Recently, China started investing in European robotics firms and has already bought several multi-billion dollar firms. As soon as 2020, the majority of the world&#39;s industrial robots will be &ldquo;Made in China&rdquo; or will be made by firms owned by China.</p> <p>Onshoring will explode in size in the next few years. Domestic factories will become much more automated. Work will move from China back to the U.S. and Europe. But only a fraction of the jobs will be re-shored&mdash;robots will do most of the work. Traditional factories in the U.S. won&#39;t always have the ability to maintain these robots. Just as hospitals turned to outsourcing to deal with training and maintenance, the arrival of a massive number of industrial robots provides a huge opportunity to outsourcers...IF they have the skills and the scale needed to support this transition.</p> <p>Need another example? Consider&hellip; computer support. The old model was that any corporation of significant size ran its own IT department to roll out servers, add hard drives and monitor networks. Amazon Web Services (AWS) and Microsoft Azure have taken over the IT functions of thousands of companies. Startups are now starting up without server rooms. Amazon Marketplace has taken over warehousing, distribution and other aspects of America&rsquo;s small businesses.</p> <p><strong>Consolidation:</strong>&nbsp;What&rsquo;s next? Remember our friends over at Foxconn? They negotiated a deal to build an &ldquo;assembly factory&rdquo; in Wisconsin. The key factors to follow in this deal are&hellip;</p> <ul> <li><strong>Scale:</strong>&nbsp;The factory, when fully built, will employ 13,000. Keeping in mind that Foxconn has stated that it will build a VERY automated factory, that makes it a VERY BIG factory. Inside this huge factory, Foxconn will initially build flat screen TVs, but by building on the expertise they developed in China, they can create virtual assembly lines for smaller customers with a variety of assembly needs.</li> <li><strong>Automation:</strong>&nbsp;Whoever builds the robots usually gets the first opportunity to maintain them. Because China is building these machines, and will soon be seen as the nation that best understands robots, we can expect Chinese competition, both from the firms that build the robots and from a new generation of Chinese outsourcers. Local outsourcers must step up their game if they want to compete in this area.</li> <li><strong>Government Relations:</strong>&nbsp;Giant factories need government support. Mega-factories lead to mega-employment, or at least new revenue. Foxconn shopped around its plans to several states, and chose the one that offers the most. Modifications to the minimum wage, changes to environmental regulations and many other &ldquo;perks&rdquo; that can be offered only by the government are being discussed. Future outsourcing will involve more mega-projects. Tomorrow&#39;s outsourcers must be skilled in government negotiations.</li> <li><strong>Financing:</strong>&nbsp;Wisconsin will provide $3,000,000,000 in government incentives. That&rsquo;s a staggering amount of money. If all government incentive packages start to look like this, government funding could become the key element in every new project.</li> <li><strong>New Industry:</strong>&nbsp;Foxconn and Amazon are developing new types of outsourcing. In a world where our homes are filled with electronic gadgets, assembly and technical support will be HUGE and growing industries. Start-up firms increasingly want to focus on design and market, leaving it to other partners to manufacture their products.</li> <li><strong>Customization:</strong>&nbsp;This new model of automated, onshore manufacturing allows more products to be released, more often. Soon, customization will become the norm. For example, smartphones offer different amounts of memory, color options and processor types. But these customizations are built in to the phone and must be installed when you buy the phone. That means a long wait for the next batch of phones if you choose popular&nbsp;options. When the factory is just a few miles away and robots can be quickly reprogrammed, new assembly lines can be instantly converted to build your product. Then, your custom phone could be just a day away...especially if it is delivered by an Amazon drone!</li> </ul> <p>So back to the original example&hellip;hospitals grew, developed new technologies, grew some more, developed a network of services and suppliers, and then outsourced many of their day-to-day functions. Onshore manufacturers are in a very similar position. The new wave of onshoring will trigger the movement of more work in product distribution, IT support, hardware management and other services to outsourcing providers.</p> <p>If the Foxconn deal proceeds, who will build the factory? Foxconn has powerful connections with China&rsquo;s government, construction firms and banks. In other nations, Chinese companies that build new factories use Chinese construction firms (the largest in the world) and Chinese banks (which are in the top 10 largest) to finance projects. If Chinese firms are not brought into the Foxconn deal, Foxconn is likely to make major investments in local construction firms and contractors.</p> <p>The arrival of intelligent robots and advanced automation are changing the way that factories manufacture and corporations work. This in turn will lead to larger outsourcing projects, and the need for multifaceted outsourcers with a wide range of skills and deep pockets. There will still be room for specialized outsourcing and smaller implementations, but more and more money will be tied up in big projects that only a small number of outsourcers can deliver. If you want to be in this elite group, start lining up your partners!</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/automation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Automation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/cost" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Cost</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/robotic-process-automation-rpa" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Robotic Process Automation (RPA)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/strategy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategy</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/technology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Technology</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Back to the Future...of Outsourcing! - Future of Sourcing" addthis:url="https://futureofsourcing.com/back-to-the-futureof-outsourcing"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Fri, 29 Sep 2017 20:13:10 +0000 Chris Niccolls 1011 at https://futureofsourcing.com The Golden Age Of Outsourcing https://futureofsourcing.com/the-golden-age-of-outsourcing <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/china-outsourcing-624x325-624x325.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/china-outsourcing-624x325-624x325.jpg" title="The Golden Age Of Outsourcing" class="colorbox" rel="gallery-node-985-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/china-outsourcing-624x325-624x325.jpg?itok=ALzwE-jw" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>At the turn of the 21st century, outsourcing was going full blast, moving from obscurity to mainstream. It quickly improved corporate profits and promised long-term benefits through continuous improvement…at least that’s what was supposed to happen. Now, robots are arriving in the workplace. Is it a threat? Or is the “Robot Revolution” our second chance for a golden age of outsourcing?</p> <p>The last wave of outsourcing was an eye opener for corporations. Everyone had heard about outsourcing and offshoring in auto factories. Yet, it seemed impossible that the same techniques could work for banks and non-manufacturing corporations.</p> <p>Early on, outsourcing suppliers talked about more than just lower wages. Survey after survey told us that corporations wanted innovation, improved quality, and freed-up time for managers, not just lower wages. But after receiving a huge financial benefit by the first or second year, other benefits were de-emphasized or forgotten by corporations. A few programs did prioritize Six Sigma, LEAN, and other efficiency methodologies, but they were exceptions. Long-term planning and management is stressful and can be risky, but when it is successful program costs are kept under control and the program can deliver exceptional benefits. Yet, few programs were “ambitious” enough to demand, and pursue, all of the benefits they originally agreed to.</p> <p>It was easier for companies to get their big financial benefit with the first contract and then try to negotiate a lower price for the renewal. However, when productivity and quality were not addressed, costs rose. Offshore inflation in Asian countries was usually higher than in Europe or the US. Companies that used offshore locations might luck out on foreign exchange rates on their second contract, but by the third contract, companies surely had to deal with rising prices.</p> <p>Addressing internal inefficiencies might have worked just as well, but most companies began to look for lower cost locations. China (manufacturing) and India for knowledge services (legal, banking, insurance, research, IT) were the lowest prices on earth…for awhile.</p> <p>By 2015 Chinese wages were two to four times higher than neighboring Vietnam and Cambodia. Brazil, Eastern Europe and other locations tried to duplicate India’s success, with mixed results. By 2017, outsourcing work was tried everywhere—it had literally gone to the ends of the earth! The days of wandering around the world in search of a significantly lower wage are over. But if you stay where you are? Then costs will inexorably rise. It’s time to think about the most efficient place on earth, which may be closer than you think!</p> <p>Producing a physical product offshore costs time and transportation. Real estate in China and India is surprisingly expensive, at least in any place that it makes sense for you to operate. Many domestic locations cost far less and do not require extensive power backup, dedicated employee transportation and other infrastructure.</p> <p>IF wages can be neutralized, the best place to manufacture might be in your home market. More specifically, if a machine can build a product in one location, it can build it in another. The “labor” then becomes the same anywhere in the world. Transportation, real estate and other costs become more significant, as does opportunity cost. Restocking offshore products can take a month or more. Onshore, customers can go to another store or buy a similar product from another manufacturer. Factories built near the markets they serve can restock quickly.</p> <p>As manufacturing returns to the US, will these corporations build and manage their own factories? Or will they outsource factory management? New factories MUST be highly automated with few employees. It may make more sense to build super factory complexes that can be efficiently supplied and perhaps powered by factory controlled power plants. Factory complexes that support multiple companies and brands will have greater leverage when negotiating with states over tax breaks and work conditions. It may also be easier for customers to outsource rather than renegotiate an existing union contract.</p> <p>Automated factories require lifecycle management. In the past, factories were built and run until they had no value left. Machinery might have been upgraded occasionally, but most equipment lasted for 20-50 years. Some industrial machines were so large that the building had to be built around it. Automated factories will require much more frequent changes.</p> <p>If a complex of factories contains multiple corporations, some will grow, some will shrink and some will go out of business. Early adopters will start off with far fewer workers than comparable factories of the past. Over time they will evolve into “lights out” facilities, requiring no staff at all. Former employee parking lots will be redeveloped into other types of space. Automated equipment will undoubtedly require more frequent upgrades. There is a strong argument to be made for outsourcers to take on this role. If major US and European outsourcing companies are not quick to tackle this challenge, a new competitor may be very eager to develop an onshore presence. China. Think about it!</p> <p>China dominates offshore manufacturing, but recent increases in compensation have hurt its competitiveness. China’s wages are four times higher than Cambodia’s! The writing has been on the wall for years, which is why, in 2015 the, the government allocated $250 billion for projects to replace manufacturing workers by 2021.</p> <p>Even before this mammoth infusion of money, China was the world’s largest buyer of industrial robots. Now they will also be the world’s largest buyer of industrial robot manufacturers. In 2016, they bought $10 billion worth of European robotic firms, and they have plenty of money to buy more.</p> <p>The official global production of industrial robots is 250,000, growing at 35% annually. A little-known fact is that China produces at least 100,000 additional industrial robots that are not counted in global production Why are they left out? Because they are often used by the companies that build them, and because they are outdated by international standards. But, in China, they do the job. And as China buys more and more Western robotics and artificial intelligence (AI) firms, we can expect China to DOMINATE global robotics.</p> <p>Today China builds 100,000 and they buy 70,000 robots annually. They’ve barely begun to spend their $250 billion nest egg. If robot sales grow at their current rate, between 1 and 1.5 million robots will be sold by 2021, and half a million will be built in China. By 2025 China will produce half of the world’s robots.</p> <p>In a handful of years, no matter where you build your factory, your (robotic) workforce will be “made in China.” Not interested in lower cost Chinese robots? What if the construction was financed by a Chinese bank and a special discount was offered if a Chinese construction company did the work? Similar interlocking deals have powered China’s expansion in Africa and Asia. I’m betting that a Chinese end-to-end factory could be far better priced than more domestic funding.</p> <p>Knowledge work has different needs but will create similar new opportunities. Because physical products don’t need to be moved around the world, transportation is not an issue. Productivity is.</p> <p>India has been successful in all sorts of knowledge work. However, it often hits a glass ceiling. Many junior knowledge workers are created, but the big prize—senior knowledge workers—has been elusive. The old promise was to have junior work performed by more skilled staff, resulting in a more educated knowledge worker, but that never materialized. Is it because of prejudice against foreign workers, lack of “real” work environment exposure, or the resistance of skilled workers to performing less skilled work? Whatever the reason, outsourced workers often fail to become the MOST educated knowledge workers, instead falling into support roles. These roles are likely to be automated. Soon.</p> <p>India’s legendary IIT and IIM Universities have highly respected graduates. Yet, basic education has not risen above sub-standard. Some experts say that the secret to surviving in a robotic world is education. Should the offshoring platform of the future be Canada, Singapore, Israel, Australia and other countries with the best-educated citizens?</p> <p>While India is the world’s back office support for IT, they produce few notable software products. India should produce more than 3,000 patents every year. Without more software, AI or robotic leadership, India is in for a rough time in the next decade.</p> <p>Outsourcing once promised more than lower wages. Work was going to be revolutionized. For the last 20 years, outsourcers have talked about continuous improvement and long term benefits. The Robot Revolution could be Outsourcing 2.0. But if your focus is still on lower wages, you probably won’t survive the coming big squeeze. If, instead, corporations focused on quality management, continuous improvement, and the strategic use of automation, long overdue benefits will help your program thrive!</p> </div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="The Golden Age Of Outsourcing - Future of Sourcing" addthis:url="https://futureofsourcing.com/the-golden-age-of-outsourcing"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Fri, 11 Aug 2017 21:26:00 +0000 Chris Niccolls 985 at https://futureofsourcing.com Offshore Impact: Report From The Trenches https://futureofsourcing.com/node/710 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/xoffshoring-420x215.jpg.pagespeed.ic_.Ekb4_qIKuH.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/xoffshoring-420x215.jpg.pagespeed.ic_.Ekb4_qIKuH.jpg" title="Offshore Impact: Report From The Trenches" class="colorbox" rel="gallery-node-710-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/xoffshoring-420x215.jpg.pagespeed.ic_.Ekb4_qIKuH.jpg?itok=XD2GNfFT" width="420" height="215" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Almost every week in the last few months someone has asked me about the general mood on the streets of Bangalore. What are the IT professionals in the Silicon Valley of East making of the changes in the industry? How is the senior management of offshore headquartered service providers preparing for the future? While there are several versions of the predicted future, everyone agrees that this is a watershed moment in the evolution of the IT outsourcing and offshoring industry.</p> <p>The overall mood is somber at best in most places. Folks at mid-level are trying to make sense of the sweeping changes they are seeing at their companies. There&rsquo;s a freeze on recruitment and companies are laying off people in thousands. This is beyond anything in the past and hence difficult to fully comprehend for most people. The events of 2008 and the changes that it brought upon the IT outsourcing industry were generally the same as those experienced in the business environment globally. The changes this time seem to be largely confined to the IT outsourcing industry, stemming from concurrent external and internal factors, the sheer timing of which are exacerbating their impact.</p> <p><strong>External Factors</strong> One of the key external factor relates to the environmental changes that have crept in from their largest market (US). The changing visa norms are already hurting the providers in a big way as they grew riding on the labor arbitrage opportunities of the &lsquo;90s. The new world will see local hires (than expats) in onshore roles. Not only will this reduce profits, but it will also affect operating models as local hires lack the experience of working in the onsite-offshore model that expats possess.</p> <p>Another external factor is the emerging wave of repatriating work back in-house that many companies had started in recent years. There are several factors contributing to this decision but overall the market essentially shrinks as companies reduce outsourced IT services.</p> <p><strong>Internal Factors</strong></p> <p>One of the critical internal factors that is driving several changes stems from the blatant increase in workforce that providers experienced as revenues moved up over the years. Almost all revenue forecasts until recent times were accompanied by targets to linearly increase headcount. In an almost gold rush-like frenzy, the providers were busy adding staff to increase revenue with little attention to when the pyramid would crumble. Those realities are now haunting most large service providers. The uberization of IT services, with on-demand and low capex driven spending has reduced on-premise complexity of IT for enterprises. Even large companies have now embraced cloud based productivity, messaging, HR, CRM and ERP applications which have done away with the need to build, maintain and manage applications and related infrastructure. The pie has obviously shrunk. With the digital economy riding on social, mobile, analytics and cloud solutions, outsourcing contracts have shrunk in size and duration. Enterprises are more open than ever to work with multiple providers&mdash;including niche providers&mdash;to get the best solution rather than go with one large provider who brings integration as a value. Many large providers have lost revenue to much smaller companies or even start-ups who are more nimble and hungry. Another factor that has been written a lot about, is the higher level of automation that has been attributed to redundancy of jobs at service providers. This one factor is highly debatable based on insights from people inside most service provider organizations. The reality seems to be that most automation programs have not yielded results to bring outright reduction in workforce. However, service providers are finding this as the best reason to blame for workforce reduction. The reduction is often happening due to other factors listed above but attributed to automation.</p> <p><strong>Company-Specific Factors</strong></p> <p>Apart from the internal and external factors listed above, some of the largest offshore headquartered service providers are also dealing with the agony coming out of succession planning issues, boardroom squabbles or rumors of sell-off. These couldn&rsquo;t have come at a more inopportune time for them. With all these factors, the uncertainty quotient is very high. Time will tell how things pan out. Whichever way things move on, it is clear that this is part of the industry maturing and being guided&nbsp;by underlying business drivers. A course-correction always ensures that in the long run things are grounded and set for sustained value delivery. Despite the pain, this one would be no exception.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/cloud" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Cloud</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/it" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">IT</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/innovation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Innovation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Outsourcing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/data-analytics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data Analytics</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/technology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Technology</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Offshore Impact: Report From The Trenches - Future of Sourcing" addthis:url="https://futureofsourcing.com/node/710"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Sat, 24 Jun 2017 01:01:35 +0000 Ashutosh Agarwal 710 at https://futureofsourcing.com https://futureofsourcing.com/node/710#comments Sin to cross the oceans? https://futureofsourcing.com/node/637 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/xRavi-Venkataraman-Jan-2017-1-420x215.jpg.pagespeed.ic_.1zcci3ZGqf.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/xRavi-Venkataraman-Jan-2017-1-420x215.jpg.pagespeed.ic_.1zcci3ZGqf.jpg" title="Sin to cross the oceans?" class="colorbox" rel="gallery-node-637-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/xRavi-Venkataraman-Jan-2017-1-420x215.jpg.pagespeed.ic_.1zcci3ZGqf.jpg?itok=GZiRaa7z" width="420" height="215" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Our ancestors in India always told us that it was a sin to cross the oceans (and many in India do not cross oceans even today). There was something about globalisation that they just did not like and I have not been able to figure out what it is.</p> <p>But, it is playing out now and I am getting a glimpse of their wisdom. When business started globalising and multinationals sold their goods/services in other countries, there was euphoria in the developed countries. However, over a period of time, multinationals realised that they needed to make their products more affordable. Though prices needed to be lower, they realised that demand was growing faster in these markets. The developing countries also had customs and duty tariffs that became barriers. So, multinationals started manufacturing in those countries and the first form of outsourcing started. We can see the ripple effect of outsourcing now in recent elections in developed countries, as decades of the outsourcing of manufacturing and services has left only uncertainty there.</p> <p>As business grew, technology had to get better - and as technology got better and better, business models started changing. Over the years, digital disruption has made it easy for funds to be transferred across the world in seconds. Banks and banking regulators have struggled to keep pace with these changes. This has resulted in terror and drug money being moved across countries at rapid pace. While talking about the spread of a particular religion during the 1980s, one Middle Eastern leader said, &ldquo;We will take over Europe without firing a shot.&rdquo; The increase in violent terror attacks in that continent&nbsp;has got people&nbsp;worried - and they are increasingly sending a message to their governments that immigration has to stop.</p> <p>When years ago Americans called for a stop to outsourcing to Mexico, China and India, the first shots were fired against globalisation. However, Al Gore lost the election narrowly to George Bush despite his rants on outsourcing. Nothing happened during the Obama years and companies merrily outsourced. When Trump stood in front of a Ford factory in Florida (then being shifted to Mexico) and said that if he was elected president he would increase the customs duty rate of cars imported by Ford from Mexico, he was cheered very loudly. The Americans were showing their anger. Trump won - and time will tell if this anger has won.</p> <p>The 2014 Indian elections, Brexit, Trump&rsquo;s win and now the possible victory of right-wing politicians in Austria, Italy, France (Sarkozy has lost the primaries in the presidential race in his own party to a person who is far more rightist than him in his thoughts) all are signaling a new era. As my friend put it beautifully when he predicted a Trump victory long before the US elections: &ldquo;I don&#39;t think the polls accurately capture the populist sentiment in the country. I think there is a great fear of change&hellip; We have a man acting as a lightning rod for these sentiments.&rdquo; In many European countries, including France, Belgium, Germany, the United Kingdom and the Netherlands, various concerns have led to calls for restrictions on immigration. India is witnessing a huge upsurge of populist feelings as many voters are tired of minority appeasement politics that they have seen for the last seven decades - and also laws that are not in favour of them. The mood is swinging from left to right; there are no takers for the middle path.</p> <p>I believe that the new economics of the world will be driven by the cost of technology and energy. Alternative fuels and the increasing use of solar and wind energy will result in the Middle East slowly facing turmoil as oil prices go down. My friend Chandrakant Patel told me this years ago: the cost per joule will decide how outsourcing will change to insourcing. That is already happening. Technology is breaking business models. Increasing robotisation and artificial intelligence will force countries to relook at their skill mix. The cost of labour will not be the decider: the overall cost of energy will be. We are already seeing this play out in China and India as many companies shift back their operations.</p> <p>What can throw a spanner in the works for the Americans and Europeans? Their own (mis-)understanding of demographics. Falling birth rates mean an ageing population and the need to import fresh skill sets from other countries. Further, to sustain those ageing populations, they need to import younger people. Immigration has been allowed to happen from Africa into most of Europe and from South America into the USA. If the USA and Europe do not increase their birth rates and also get the correct skill sets going, the movement of labour will continue to dog these economies - and the problems related to immigration will continue.</p> <p>As countries raise their walls to prevent outsourcing and immigration, people from developing countries may well end up deciding that it is not worth crossing the oceans. Innovation will become key to the long-term sustainability of nations. I can already imagine a world where self-driven cargo ships and cargo planes criss-cross the world; maybe, eventually, the producers of <em>Star Trek</em> will be in demand as goods/services can be teleported&nbsp;across the world: &ldquo;Beam me up, Scotty.&rdquo;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/strategy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategy</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/business-transformation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Transformation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/technology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Technology</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/innovation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Innovation</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Sin to cross the oceans? - Future of Sourcing" addthis:url="https://futureofsourcing.com/node/637"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Wed, 04 Jan 2017 01:17:27 +0000 Ravichandran Venkataraman 637 at https://futureofsourcing.com https://futureofsourcing.com/node/637#comments The other shoe just dropped https://futureofsourcing.com/the-other-shoe-just-dropped <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Adrian-Guttridge-May-2015-2-624x325%20%281%29.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Adrian-Guttridge-May-2015-2-624x325%20%281%29.jpg" title="The other shoe just dropped" class="colorbox" rel="gallery-node-816-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Adrian-Guttridge-May-2015-2-624x325%20%281%29.jpg?itok=d9XM82Dr" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>For years, the outsourcing world has been buzzing about reshoring (or &quot;backshoring&quot;), taking the jobs we sent offshore years ago and bringing them back to the US and Europe. Low wages, cheap property, and favourable taxes made offshore manufacturing very attractive. But in recent years property values rose, staff turnover increased, and wages just keep heading up. Despite weakening economics, offshore still made sense. Until today!</p> <p>By far, the greatest financial advantage to offshore manufacturing was derived from labour arbitrage - from lower wages from &quot;replacement&quot; workers. Low wages plus workers who can do the work are a winning combination. To access low-cost labour, manufacturers will happily build the factories, roads, and infrastructure needed for manufacturing. China has been the gold standard for outsourcing, but western manufacturers are being lured by still lower wages in Vietnam or Thailand. Now, technology has taken a big leap forward, and suddenly... wages don&rsquo;t matter!</p> <p>Today&#39;s robots are intelligent machines that can perform almost every function a human being can. The latest intelligent machines don&rsquo;t just help workers to be more productive, they completely replace workers. Robots eliminate the need to build factories where low-cost workers live. You can just build the factory where you want and install robots instead of workers. When wages no longer matter, onshore factories make a lot of sense.</p> <p>Onshore factories certainly make sense to Adidas. Last year Adidas built their first SpeedFactory in Germany. A SpeedFactory is their name for&nbsp;<a data-mce-="" href="https://niccollsanddimes.com/2016/09/30/adidas-speedfactory-a-big-step-towards-onshoring-work/" target="_blank">a new generation of onshore factories</a>&nbsp;that provide three benefits. First, it is highly automated, delivering a lower cost of operation than an offshore factory. Second, by building the factory in major consumer markets, transportation costs are greatly reduced. Lastly, because SpeedFactories are built near consumers, Adidas can quickly restock sold-out products and reduce customer frustration.</p> <p>Not surprisingly, Adidas is building a second SpeedFactory in Atlanta, scheduled to open in 2017. Reebok, a subsidiary of Adidas, has announced the construction of a similar factory in Rhode Island. Nike has been talking about building a new factory in Oregon for the last year. (Come on Nike&hellip; Just do it!) What looks like a pretty good idea today, will be an irresistible financial proposal in a year or two.</p> <p>One of the biggest difference between a human worker and a robot is the way costs change over time. Workers want raises and promotions. Over time, the same factory producing the same number of goods has higher labour costs. When the factory is offshore, this happens even faster due to higher offshore inflation and increasing competition for workers. Robots, however, cost less every year. Next year&rsquo;s model will work faster, have more capabilities, and still cost less. As time goes on automation looks better and better.</p> <p>If this is the beginning of a new era, where onshore can be more efficient than offshore, what will happen to all of the work that is already offshore? If a location only offers lower wages, we can expect that work to be reshored in a few years. Offshore factories need more compelling advantages to resist reshoring? Since China has the most to lose from reshoring, let&#39;s see if their plans tell us anything about the future of offshoring.</p> <ul> <li><em>Domestic Market.</em>&nbsp;When offshoring took off at the turn of the century, products were manufactured almost exclusively for the West. Today, China is the largest consumer of Chinese manufactured products. For example, while America has peaked at 100 million iPhone users, China has 135 million users and plenty of room for expansion. China is able to be a &quot;local&quot; supplier for east Asia and India&hellip; if they maintain their manufacturing edge.</li> <li><em>Energy</em>. Manufacturing requires electricity, and next to labour, energy is often the highest cost for manufacturing. America has a significant cost advantage for electricity compared to most of Europe. Underdeveloped countries have high-cost power and unreliable power grids. In many offshore locations, manufacturers must invest in generators and other infrastructure. The cost of electricity in China is comparable to America. However, in the past decade, China built hundreds of new coal plants, is building 20 nuclear plants, and has more solar and wind power in production than any other nation on earth. Old and inefficient plants are being closing. By the 2020&#39;s, China may set a record for inexpensive power generation.</li> <li><em>Technology</em>. China&rsquo;s population has almost plateaued, and by 2100 will decline by 500 million. China already has problems hiring for manufacturing jobs, which has led to runaway wage increases. China has very ambitious plans to add between 1 and 4 million robots by 2020. If China succeeds, China will need to build and install enough robots to become the world&#39;s undisputed #1 manufacturer and consumer of industrial robots. Furthermore, because of this robotic work, by 2020 China&nbsp;<em>must</em>&nbsp;develop the ability to build the most efficient factories in the world.</li> <li><em>Financing.</em>&nbsp;If hundreds (if not thousands) of robotic factories are going to be built in America and Europe, that will require capital financing. Four of the top 10 banks in the world are Chinese, two of which have &ldquo;Industrial&rdquo; or &ldquo;Construction&rdquo; in their names. China also happens to be home to six of the world&rsquo;s largest construction firms.&nbsp;<a data-mce-="" href="http://outsourcemag.com/writing-competition-2nd-place/" target="_blank">With leading positions in banking, construction and robotics China is going to build most of the world&#39;s new factories.</a></li> </ul> <p>Adidas pointed out the value of reshoring, and other big-brand athletic gear companies are hot on their heels to find new onshore manufacturing efficiencies. If China dominates in robotics, energy production, financing, and construction, they will move beyond the title of &ldquo;The World&rsquo;s Manufacturer&rdquo;. China is positioned to also dominate in building the next generation of factories throughout the world, or at the very least to be the default option for every factory that is built in the 2020s.</p> <p>The latest generation of technology will level the playing field for manufacturing, making a factory built onshore as financially attractive as locations halfway around the world. After a very long time, the tide has turned and new factories will be built in America and Europe. The trend has just begun, but every week we&rsquo;re going to see new models of industrial robots at ever lower price points.</p> <p>Everyone who manufactures offshore will soon start thinking, &ldquo;Does it make sense to stay offshore?&rdquo; If you are an outsourcing provider, you need to ask yourself, &ldquo;If low wages no longer matter, what is my new value proposition?&rdquo;</p> <p>When it comes to robotic factories, onshore and local has big advantages over offshore and distant. As&nbsp;<em>all</em>&nbsp;factories become robot factories, the change in locations is just the beginning of changes that factory owners, outsourcers, consumers and experience as technology replaces workers, and the world&#39;s factories are made in China!</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/technology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Technology</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/strategy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategy</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/robotic-process-automation-rpa" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Robotic Process Automation (RPA)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/offshoring" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Offshoring</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Outsourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/backshoring" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Backshoring</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/reshoring" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Reshoring</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="The other shoe just dropped - Future of Sourcing" addthis:url="https://futureofsourcing.com/the-other-shoe-just-dropped"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Wed, 02 Nov 2016 00:47:53 +0000 Chris Niccolls 816 at https://futureofsourcing.com https://futureofsourcing.com/the-other-shoe-just-dropped#comments Is the Philippines' political unrest an opportunity for other BPO markets? https://futureofsourcing.com/node/814 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Mark-Hillary-Oct-31-2016-1-624x325.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Mark-Hillary-Oct-31-2016-1-624x325.jpg" title="Is the Philippines&#039; political unrest an opportunity for other BPO markets?" class="colorbox" rel="gallery-node-814-0WBP98M8v5s"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Mark-Hillary-Oct-31-2016-1-624x325.jpg?itok=a_5MpTXl" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>I visited Cape Town and Durban recently as a guest of&nbsp;<a data-mce-="" href="http://www.bpesa.org.za/" target="_blank">BPESA</a>&nbsp;(Business Process Enabling South Africa) and attended the South Africa BPM Summit 2016. The summit featured local business leaders, industry influencers, and politicians&nbsp;<a data-mce-="" href="http://www.bpesa.org.za/wp-content/uploads/2015/08/BPESA-Nelson-Hall-Report-low-res1.pdf" target="_blank">eager to create jobs in South Africa by riding the wave of business process outsourcing (BPO)</a>.</p> <p>Since the last time I visited South Africa, about a year ago, there have been three important changes that I noticed about the BPO sector there:</p> <p><em>1. Brexit is causing uncertainty.</em>&nbsp;It might be a long way from South Africa, but much of the BPO work carried out in South Africa is for clients in the UK. The uncertainty over Brexit is causing chaos with budgets for 2017 meaning that many decisions are being deferred and investment that was expected is just not happening. South African growth plans are being revised because of a referendum that took place last June in the UK and the UK will remain inside the EU until 2019 based on current plans, so this uncertainty will not be over anytime soon.</p> <p><em>2. New markets.</em>&nbsp;Many South African suppliers are exploring how they can find customers in new markets, partly because of Brexit, but also because the providers want to spread their wings and serve new customers. Australia is a target market, although limited in scale. The USA is another region where South African suppliers are now really waking up and planning their B2B marketing campaigns.</p> <p><em>3. Changes in service.</em>&nbsp;The South African BPO industry has been founded on contact centres. That&rsquo;s really how the industry got started, the cultural affinity between British callers and South African agents proving to be a better offshoring option than rivals such as India. However, the range of BPO services now being undertaken is much wider, including a complete range of back-office processes. One provider told me that they have grown their revenue, yet the amount of contact centre work has dropped from over 90% to just over 60% of their business.</p> <p>To my mind there is a great opportunity for South Africa right now and that is the USA market and the breakdown in diplomatic relations between the Philippines and USA thanks to the new motormouth president Rodrigo Duterte.&nbsp;<a data-mce-="" href="http://edition.cnn.com/2016/10/25/asia/duterte-us-comments/" target="_blank">Duterte has declared</a>&nbsp;that he wants to end the close relationship between the USA and the Philippines and has even ordered that all American troops leave his country within the next two years.</p> <p>Take a look at the stated ambitions related to BPO by BPESA and the government in South Africa:</p> <p data-mce-style="padding-left: 30px;"><em>&ldquo;The Government job creation target over the next five years in the offshore sector is 15,000, which will bring the total of offshore jobs figure to 40,000. The total employment in the industry (offshore + domestic) is also expected to rise and could reach 250,000 over the next five years.&rdquo;</em></p> <p>So at present, about 25,000 to 30,000 jobs are involved in serving overseas customers. The Philippines has&nbsp;<a data-mce-="" href="http://www.ibpap.org/about-us/it-bpm-roadmap-2012-2016" target="_blank">around 1.3 million</a>&nbsp;people employed in business process management (BPM) jobs with many of those linked to the support of customers in the USA.</p> <p>Just taking a small slice of that American business from the Philippines to South Africa could dramatically improve the BPESA ambitions, although it depends on how the political uncertainties play out as we move into 2017 and on the ability of the South African suppliers to switch their marketing efforts from the UK to USA. Duterte may be talking tough about diplomatic relations, but we are yet to see how his words will affect business links.</p> <p>The BPO market in South Africa is highly developed with many well-known global suppliers in addition to local firms. I foresee the South African market moving beyond the geographic focus on Cape Town and into more complex services, such as insurance and retail back-office process management. The opportunity is there for the suppliers to move their attention away from the troubled UK market - if they can organise effectively and target new American prospects. Will they do it? I suspect that if they don&rsquo;t then the entire BPO market will struggle as Brexit is making the UK an unreliable partner for the next few years.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/strategy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategy</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/business-process-outsourcing-bpo" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Process Outsourcing (BPO)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/offshoring" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Offshoring</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/politics" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Politics</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/brexit" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Brexit</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Is the Philippines&#039; political unrest an opportunity for other BPO markets? - Future of Sourcing" addthis:url="https://futureofsourcing.com/node/814"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/europemiddle-eastafrica" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Europe/Middle East/Africa</a></div><div class="field-item odd"><a href="/regions/asiapacific" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Asia/Pacific</a></div></div></div> Mon, 31 Oct 2016 17:34:58 +0000 Mark Hillary 814 at https://futureofsourcing.com https://futureofsourcing.com/node/814#comments