Businesses are always on the lookout for ways to become more efficient, and it’s no secret that many companies have outsourced various processes to cut costs. However, this also takes jobs away from US citizens – and the benefits of offshore operations may no longer even apply as the global scenario shifts. Here’s why you may want to help support the movement towards reshoring instead.
Any time a business outsources labor to an overseas partner, distance and effective communications become a significant factor in determining the quality of output. In some situations, the risk of an adverse effect on quality can be mitigated; outsourcing customer service or back-office operations, for instance, can be monitored remotely with any issues addressed promptly. Manufacturing is a different story; company representatives will need to engage in constant travel to inspect the product components. Otherwise, the finished product may arrive with defects. When you’re working on a tight schedule of construction in Salt Lake City, this is the sort of concern that can be avoided by obtaining fabricated metal products from a Utah supplier.
Outsourcing has long been touted as a means by which companies can reduce costs by taking advantage of inexpensive labor in other countries. While this was the case around the turn of the century, nations develop and become competitive; the cost of labor in China as of 2017 was already on par with countries like Portugal and South Africa, which aren’t exactly famous for cheap labor. Companies may end up relocating offshore operations to the next manufacturing hotspot, such as India or Sri Lanka, but eventually wages there will rise as well. When you take the long-term view, with increased stability and streamlined transport logistics factored in, reshoring can easily be more cost-effective.
Supply chain stability
The recent coronavirus outbreak has seen many manufacturers halt operations due to a reliance on overseas labor and suppliers. However, even in the months before the pandemic, other events had already highlighted increasing volatility in the global supply chain; you only have to think back to the Brexit announcement and the US-China trade war, for instance. The world will recover from COVID-19; globalization won’t go away, but continued reliance on offshore processes and suppliers will only increase a company’s exposure to unpredictable events and demand a rapid response to any new regulations and tariffs. Reshoring operations will bypass these difficulties by simplifying and stabilizing the supply chain.
Local economic benefits
Ever since outsourcing became vogue among America’s biggest companies, workers have clamored for the country to bring back jobs and support the domestic economy. Recent reports have shown an unemployment spike as the previously mentioned events on the global stage have shaken up the economy; At the same time, the government’s planned stimulus package will alleviate the problem, there is no doubt that reshoring will also help restore jobs and provide new opportunities to American citizens. By playing a significant role in boosting the local economy, companies that shift towards reshoring will also contribute to fostering innovation and competitiveness across the country, while benefiting from increased goodwill in their respective communities.
The past few decades have seen outsourcing become a widespread practice in the US, but the world situation is always changing. The benefits of outsourcing are now called into question; whether you’re a business decision-maker or a concerned employee, you can help support the local economy and add your voice to the call for reshoring in any company or industry where you’re involved.