Monday, September 06, 2004

Why is white-collar O. so hot

I was discussing during a lunch the other day why so many "knowledge" workers jobs are being outsourced at the moment? By the end of the meal we found there are at least 7 factors contributing to B. process O.(offsourcing) becoming so popular.
1. Education levels in countries in Eastern Europe and Asia have grown quickly, so that traditional knowledge advantages of western countries have deminished.
2. Major differences in salaries, wages, and related cost of labor between the western world and these developing countries are however (still) remaining.
3. Transportation costs have gone down. Data communication and internet progress decrease the costs of transport for many non-physical services and products, and Supply Chain Management and Demand Chain Planning technology also decrease transportation and total Supply Chain costs for physical products.
4. Technology also facilitates to deal with a traditional disadvantage of offshoring: adopting to changing customer demands. Good Market Responsiveness can be achieved even when a product is not manufactured or assembled at a location near the customer.
5. With economies in the developing companies stabilizing, the risks of offshore O. have deminished.
6. The Capital Intensity of many industries is decreasing. This capital intensity to create or move a factory was traditionally a discouraging factor to changing production locations.
7. In some cases "the market" of the future is actually the Asian countries so it's advisable to be there.

Do you know of more factors that contribute to strategic B. cases in favor of process O. of "knowledge workers" jobs?