The practice by organisations ‘offshoring’ certain departments or functions may be coming to an end due to digitisation, according to a new report.
A new study by AT Kearney claims that decisions to offshore, nearshore or re-shore will continue to be disruptive, mainly due to digitalised supply chains.
Offshoring has been used for decades by companies looking to reduce labour and production costs. But with organisations now moving operations away from countries such as India and China, the study says that re-shoring could be the next trend for SMEs.
The impact of the global economy will eventually level out cost savings from offshoring, the report argues. Additionally, the impact of cheaper local production of items through methods such as 3D printing and the demand for next-day delivery by consumers could see the end of offshoring as we know it, the study adds.
In the United States, government incentives reward organisations who re-shore activities. This practice is expected to be adopted by more establishments around the world with politicians keen to bring back jobs from Asia and the Far East.
The influence of digitisation empowers organisations with greater flexibility, smarter supplier networks, and the freedom to make smarter, more informed decisions to future offshoring, near-shoring and re-shoring strategies, the report concludes.
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