In a recent article published in EMS2007, Eric Miscoll, of Charlie Barnhart & Associates, discussed the health of the Electronic Manufacturing Services (EMS) industry. EMS is a mature business that has seen tepid growth, due to overcapacity and a slow, but steady, move toward bringing some high level manufacturing back in-house.

Growth forecasts for the EMS industry are weak - between 0% and 7.8% for the next three years, primarily due to the issues described above. The article argues that, until there is a new "killer app" (i.e., a new, innovative product), a reduction in capacity or a modified focus on customer interest, Mr. Miscoll doesn't see general growth in the industry.

One of the other criticisms Miscoll has of the industry is their focus on tweaking their value proposition rather than bringing real innovation to their business model. As I have learned from BPO, it isn't clear whether customers want innovation - or are willing to let outsourcing partners profit from innovation - so there may be external constraints here.

In fact, I would suggest that the article be read by all in outsourcing, regardless of industry. While the timing of the underlying issues may differ by industry segment, the issues themselves remain constant - maturity, capacity, customer service and innovation. Outsourcers of all stripes must continue to address these issues to sustain growth in the sector.