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Outsourcing Services Sector Analysis

Updated on August 22, 2010

Outsourcing Services

Outsourcing Services is turning into a bigger and bigger trend in various industries in the world. Since nearly all the industries in the world are turning into more competitive ones, there has arisen a need for more specialized products, as well as products of higher quality. This is where outsourcing comes in: there are certain segments the supply chain that are passed on to outsource partners so that the whole process ensure more quality and efficiency. This means that ultimately, the consumers are the bigger winners.

In addition, the demand for outsourcing services has helped pushed communication infrastructure in developing countries. Firms have needed more efficient methods of communicating with other firms since, at times, they need to correspond with the service companies in order to clarify specifications or ensure prompt delivery. Companies rely on strong telecommunication infrastructure since outsourcing services do not usually happen within the same country. Many businesses decide to outsource from low incomes countries where the costs for their services are considerably lower. For example, the company H&M has their clothes manufactured in places like Bangladesh and China; Thailand is known for being a high quality producer of t-shirts; Polo Ralph Lauren has a popular, well-established relationship with a production company in China called Luen Thai.

It has also become a cutthroat market for service providers. Luen Thai has been continually expanding its operations to absorb the supply chain process of Ralph Lauren which means they will make more money while letting Ralph Lauren save money on production and shipping. Remove This String. One report mentioned that 60% of shoes produced in the Philippines are outsourced from China.

Thus, if there is one indication that tells you that world is moving toward a global society, it is the trend of outsourcing services. This makes things more difficult for multi-national companies – laws, tariffs, and increased competition have made company sustenance very impossible. Nevertheless, this also permits brilliant prospects for starting businesses. The ultimate winner, though, is the consumer, who will receive better products, whether they are of higher quality or lower price, as long as healthy competition between the firms worldwide is maintained.

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