Strategic Outsourcing Makes Sense

Outsourcing is here to stay, as more than 90% of purchasing managers surveyed say their firms will start or continue the practice in the future

U.S. companies continue to outsource certain job functions and they plan to keep doing so, according to a Global Purchasing survey of nearly 1,000 purchasing professionals.

Sixty-four percent of purchasing professionals surveyed as part of Global Purchasing’s annual Profile Survey in late 2013 said their companies outsource work to other firms, with the majority of that work going to other locations or companies in the United States, followed by China. The prime reason for outsourcing, according to survey respondents, is to save money and make the best use of internal resources.

“Selective outsourcing is essential to maintain a balance of profitability and growth,” according to one survey respondent.

Manufacturing services are the most common type of outsourced work (76% firms do this), followed by design services (20%). Procurement and materials management, supply chain, and IT services are outsourced to a lesser extent (13%, 11%, and 13% of firms outsource this work, respectively). Nearly all of the survey respondents (93%) say their companies plan to outsource work in the future, with manufacturing and supply chain services as the most common areas. What’s more, nearly 60% of purchasing professionals say they are part of the decision-making team when it comes to outsourcing.

The trend toward outsourcing is having a variety of effects on the purchasing profession. Nearly 40% of respondents say the trend is causing a decrease in the number of available purchasing jobs. On the flip side, nearly 30% say the trend results in a greater opportunity to work on more innovative projects as menial tasks are removed from the organization.

Despite the challenges, purchasing professionals say they are not overly concerned about the negative effects of outsourcing on the profession: The majority say they are either not concerned at all (49%) or not very concerned (32%) about the outsourcing trend.

“Good outsourcing requires skilled purchasing professionals,” one survey respondent said.

 

Why Electronics Industry Firms Outsource

What is the primary reason your company outsources?

To save time

 

8.9%

To save money

 

35.7%

To make best use of internal resources

 

37.3%

Other

 

18.1%

Source: Global Purchasing, 2013

 

 

Manufacturing Services Top List of Outsourced Functions

What types of work is your company outsourcing?

Design services

 

20.2%

Manufacturing services

 

76.4%

Procurement/materials management services

 

13.0%

Supply chain services

 

10.9%

IT

 

13.3%

Other

 

13.3%

Source: Global Purchasing, 2013

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