Business continues to see strategic benefits of outsourcing

The majority of companies still believe there are significant strategic benefits and competitive advantage to outsourcing.

Independent research, commissioned by international law firm Baker & McKenzie, involved 51 in-depth interviews with FTSE 500 directors across a wide range of sectors, questioning them about the Brazil, Russia, India and China markets.

Among its findings was the revelation that almost two-thirds of companies believe that outsourcing can brings real competitive and strategic advantage.

India and Russia were singled out for their expertise in services provision. One respondent commented that India is “hi-tech, it’s well educated so it’s a good place to base centres of excellence”. Referring to Russia, another respondent said they are using “a fantastic research institute [with] a lot of well trained scientists and engineers that have surprising technology”.

China is seen as a manufacturing hotbed. However, direct investment in the country remains difficult. As one respondent said, “I have no problem with outsourcing to China to exploit its manufacturing base but I think it’s very difficult to invest in directly.”

However, the research also highlighted environmental inhibitors to moving into these markets. These inhibitors included corruption and political and economic volatility, which were mentioned in relation to Russia and Brazil. Human rights were of greater concern in India and China.

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