Downfall of Outsourcing

Filed in archive Outsourcing Issues on August 31, 2007

There is no denying that outsourcing has experienced downfall many times. This outsourcing meltdown is very evident in China's outsourcing status.

This article entitled New China Syndrome: When outsourcing turns toxic explains the different reasons why outsourcing is not helping as opposed to its original intent. Here are some of the reasons which was mentioned:

Compulsive cheapness - Cheapskate companies often put severe price pressures on suppliers that force them to find ways to cut corners.

Knowledge and control gaps - Gaps in information and oversight can be caused by distance and erosion of know-how.

Management failures - Outsourcing involves contracting with a third party to perform an activity or process.

Companies should take note of these reasons so that they would know if they are in the brink of outsourcing meltdown or they could prevent their companies from going there.