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Overseas manufacturing pros and cons

There are many reasons to use overseas manufacturing but not all of them are greeted positively.If you hold a budget focused position such as accountant or IT director you may be smiling when considering overseas manufacturing but for programmers or call center workers the reaction can be much more negative.The pros and cons for using overseas manufacturing can be related directly to the job you hold.Many studies are indicating that a significant number of jobs can be lost in the overseas manufacturing shift yet management of these companies maintain that they are creating more jobs for their companies by cutting cost.This cost cutting option becomes more and more compelling in the need for companies to maintain a strict budget to achieve a desired profit margin. Bigger and more well-known companies are making the shift to overseas manufacturing in order to increase savings and cut cost.Some of these well-known companies are British Airways, Standard Chartered Bank and HSBC.

Yet as the debate over using overseas manufacturing continues the overseas manufacturing market continues to literally explode in growth.Some indications put the overseas manufacturing market growing at approximately 27% per year. This growth compares favorably with almost any other segment of the market.Most larger companies holding significant segments in their markets are now considering a move to overseas manufacturing. The companies that typically run a call center have found that locating facilities and recruiting in less-developed countries has significant business benefits.Some of these companies are reporting a 50% savings in terms of salary cost alone.Other companies report that the productivity of those seeking work in these countries is exceptionally high allowing the company to profit even more from the lower wages paid.

In addition to a willing workforce many companies are responding positively to the cost and quality that indigenous overseas vendors are offering.Many Fortune 500 companies have combined together in an initiative to look to combine local and overseas resources to offer customers the best of both worlds.Since these markets are placed in a growing economy they escape the current depression affecting some industries within the United States.

While the outlook for overseas manufacturing looks rosy some analysts warn that companies should not get carried away just yet. While the overseas companies show impressive growth and increasing influence their overall scale is nowhere near their well-established and well-funded main counterparts. The overseas manufacturing arm should be considered as a profitable attachment to the main parent company.Companies can ease pressure by sub-contracting work at a better price abroad but must consider all factors of reliability, delivery and market attachment in the overall profit.In addition while India remains the main center of overseas manufacturing there are many other countries joining the ranks some of these being:China, the Philippines, Vietnam, South Africa, the Baltic's, eastern Europe and Russia as some of the countries growing their offshore revenue.While this is good for those countries, parent companies will have to continue to deal with sometimes uneven economic and political development within these countries.And companies within the more developed countries will have to find a way to deal with the backlash of moving jobs to these lesser-developed locations.

Overseas manufacturing though will continue to be the wave of the future.The only segment not to eventually move to overseas may be government because of the potential political consequences.Eventually though offshore providers will win out as they have in the manufacturing industry since parent companies will have no option but to produce things as cost-effectively as possible.If a quality product can be done quicker and cheaper than companies will eventually make this shift, it will become less of a trend and more of a way of life.

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