Outsourcing

To most of the British public, outsourcing has a poor reputation. In fact 80 per cent of the general public do not think the sourcing industry is helping British business today. This is reinforced by a general public belief that outsourcing does nothing to help the economy – only 19 per cent of people questioned believe that outsourcing can help get the UK out of recession (or avoid a triple-dip).

The National Outsourcing Association recently published their Outsourcing Yearbook for 2013 – an annual review of outsourcing in the UK. A very interesting area the report explores is the negative public perception of outsourcing based on a research project undertaken by the NOA in 2012 titled ‘The Public Perception of Outsourcing’.

Of course it is easy to say that the man on the street just doesn’t get it and those of us in industry do, but the NOA put their findings to leading independent economists from universities including Henley, Ashridge, Loughborough, and Kingston business schools.

  • All the economists agreed that outsourcing contributes strongly to GDP, and is a valued contributor to tax – without outsourcing’s contribution, it was predicted that the UK would be in serious recession, much worse than this period of negative growth we are currently enduring.
  • There was a unanimous opinion that the most common motivator for outsourcing is cutting costs, and everyone agreed that it is a sagacious business decision to concentrate on your core activities and particular competitive advantages
  • Everyone agreed that outsourcing generates certain transaction costs and these need to be minimised in order to maximise the efficiencies of outsourcing
  • All agreed that outsourcing and associated division of labour is a positive thing in the manufacturing industry – and that the production of added value products and growing exports is the way to grow the economy

University professors don’t have anything to gain from agreeing with one side of the argument or another. They are fortunate enough to be spending their life surrounded by researchers exploring the realities of business today.

These independent economists – who spend their life analysing how companies work – say that outsourcing as a business strategy is beneficial to the UK and helping to lift the economy.