globalEDGE Blog - By Tag: outsourcing

This blog analyzes A.T. Kearney’s Global Trends 2016-2021 report, which focuses on Political, Technological, and Demographic Revolutions. Today, I will specifically go into the 3rd trend in the report, which talks about how the Global Labor Market is approaching a tipping point. The growing labor market in the last couple of decades has been one of the primary drivers of global economic growth. According to data from the UN Population Division, the share of the working-age population globally has risen steadily from 61% in 1975 to 71% in 2015. However, the global workforce is now expected to level off around 70-72% through the end of the century. This tipping point will have significant implications on economies and businesses all around the world.

Since implementing market reforms in 1978, China has recognized the fastest sustained economic expansion in history, with GDP growth averaging almost 10%. Much of China’s assent to the second largest economy in the world can be attributed to the growth and development of their manufacturing industry. In 1990, China accounted for less than 3% of the global manufacturing output by value; today they account for nearly 25%. However, the economic and demographic trends that stimulated China’s meteoric rise are shifting and China is being forced to shift their manufacturing strategies to remain on top of global manufacturing.

Three years ago, popular global brands such as H&M, Walmart, and Gap pledged to improve safety conditions in factories overseas following a multitude of deaths due to poor labor conditions. Despite the time frame, many human rights groups believe that these promises have not been kept, and more progress is needed. Safety in working environments in Bangladesh remains poor, while global retailers continue to reap the benefits of a less expensive work force.

Given the myriad of groundbreaking new biotechnology products coupled with accelerating costs of research, development, manufacturing, and regulatory mandates, the healthcare industry today finds itself at a crossroads. Consumers, hospitals, and governments are petitioning for fairly priced goods and services without compromising top-tier quality or extending risk exposure. However, the narrowing global economic environment is persuading market-leading manufactures to reevaluate not only their value chain processing, but also their premium pricing models. Under the aforementioned conditions, it is often in the best interest of suppliers, consumers, and shareholders to empower profit maximization by outsourcing core operational services for efficiency.

As companies grow and expand, some start to lose focus on their core business, as focus is called to other areas. If these expanding companies want to keep a competitive edge on competitors, they will need to find an option that will allow them to regain focus on the core business.  One of the requirements for this strategic growth of a company is intellectual outsourcing.

The customer is always right. This golden rule of business even resonates with giant corporations—the consumers are the main priority, because without their support, revenue will stop pouring in. For example, if the consumer wants businesses closer to home, that’s what they’re going to get.  The distance problem has initiated a recent trend in outsourcing that can be seen in countries all over the world, most recently India and the United States.

With costs rising for many businesses, companies are looking for ways to save money and lower costs. Outsourcing may be the best way to do just this. The Philippines has recently become an important destination for international companies wanting to outsource their call centers. For many years, India has been a top choice country for outsourcing but the tides are beginning to change. With high number of fluent English speakers coupled with clear and neutral accents, the Philippines has attracted many companies that are looking to outsource their call centers.