Is reverse offshoring a trend?

Filed in archive Research on October 25, 2008

Couple of months ago, the pages of Wall Street Journal, Business Week and Economist were covering news about the decision of some U.S. based companies to bring back their offshore operations. As I understood, the decisions were based on in three main drivers:

- Increase in the labor salary in offshore places which was decreasing the difference with U.S. salaries.
- Increase in Fuel cost which was affecting physical logistics operation
- The change in dollar exchange rate.

In such situation, the complaints of some companies about the quality of offshore service/products is enough to trigger the change; but a recent survey done by Duke University shows that still most of the companies prefer to use offshoring or producing outside U.S..

In fact, instead of back-shoring, the trend which is shaping is finding the best location to do something; whether it is product development, production or service.

The advantage of using communication technologies helps companies achieve this; another reason is that many of the Emerging Markets are not located in the U.S. or traditional offshore places so companies sometimes (in the case of truck production in Brazil) prefer to develop and produce near the emerging market rather than some place else.

This trend, has certainly an effect:The companies are going global more than ever and so the task of supply chain optimization becomes harder...