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The Evolution of Offshoring

Multinationals and large corporations that have in the past outsourced and/or offshored manufacturing and service work are now coming full circle with this process. As outlined in a few previous Gilmore Lewis, LLC blogs, companies have begun to see an increase in wages overseas as well as in some cases issues with quality and a compounding of shipping costs thus causing them to rethink the process and to “reshore” some of their overseas manufacturing.

The theme that is now emerging (pun intended) is that many of these companies are bringing the manufacturing process back to the US for products produced here and reducing or repurposing their outsourced operations to address the local emerging markets that have become consumers of their products such as India and China.

Even China sees value in this and with Lenovo as an example has opened a facility in North Carolina in order to manufacture PCs for the US market. The political implication of this is not lost on many Americans, but there is a value to having the R&D and production right here in the US in order to speed delivery to market of their products.

Tata Motors of India is even brining some manufacturing capacity for Range Rover back to the UK for the local market there.

For more on this topic see the Economist’s Special Report: Outsourcing and Offshoring, and the section titled Reshoring Manufacturing: Coming home.

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