As the global economy continues to evolve to take on economic challenges, so the outsourcing business model is driven to change. Human Resources outsourcing, along with other outsourcing solutions, are adapting in order to meet changing needs in innovative ways. Some of the top global influencers driving this change include:
1. Labour costs are rising in China
OEMs (Original Equipment Manufacturers) who are producing their goods overseas in China because of the lower costs are feeling the pinch of rising wages in this region. While this doesn’t mean that companies will be moving out of China immediately, it does mean that long-term outsourcing solutions are being implemented to balance out these rising costs. One example of this may be to utilise cost-effective outsourcing in other parts of business operations, including Human Resources outsourcing and human capital management.
2. Supply chain risks are higher
These risks include everything from political instability in the country that’s producing your product to natural disaster and the global financial crisis. With these elements running at unprecedented highs, companies are looking to completely restructure their supply chain to reduce the effects of these risks. This includes outsourcing supply chain management to experienced companies who know how to mitigate risks and streamline operations.
3. The demand cycle is getting shorter
With the world becoming an increasingly smaller place, consumers are demanding immediate satisfaction when it comes to supplying the goods they’re looking for. Suppliers don’t feel that they know exactly what products to commit to and how many to produce, as the demand cycle can peak and disappear in an increasingly short amount of time. Outsourcing solutions such as supply chain management have become increasingly comprehensive as a result, offering end-to-end solutions that minimise response times.
4. Regionalisation is prominent
Rising transportation costs and the risks associated with global production, is making producing in outlying regions a far less cost-effective and worthwhile outsourcing strategy. As a result, supply chain management outsourcing solutions are becoming regionalised, where products are developed in the region, for the region.
5. The global market is more challenging than expected
Due to the global financial crisis that is putting a pinch on everyone’s spending, the global market is simply not as easy to succeed in as companies previously believed. Massive, poorly planned outsourcing at low costs was implemented on a global scale – a tactic that hasn’t brought in the rewards that were initially forecasted. Outsourcing solutions now have to become more customised to clients’ exact needs and built on proven methodologies if clients are to get the results that they are looking for.