Strategic Outsourcing Makes Sense

April 23, 2014
Outsourcing is here to stay, as more than 90% of purchasing managers surveyed say their firms will start or continue the practice in the future

U.S. companies continue to outsource certain job functions and they plan to keep doing so, according to a Global Purchasing survey of nearly 1,000 purchasing professionals.

Sixty-four percent of purchasing professionals surveyed as part of Global Purchasing’s annual Profile Survey in late 2013 said their companies outsource work to other firms, with the majority of that work going to other locations or companies in the United States, followed by China. The prime reason for outsourcing, according to survey respondents, is to save money and make the best use of internal resources.

“Selective outsourcing is essential to maintain a balance of profitability and growth,” according to one survey respondent.

Manufacturing services are the most common type of outsourced work (76% firms do this), followed by design services (20%). Procurement and materials management, supply chain, and IT services are outsourced to a lesser extent (13%, 11%, and 13% of firms outsource this work, respectively). Nearly all of the survey respondents (93%) say their companies plan to outsource work in the future, with manufacturing and supply chain services as the most common areas. What’s more, nearly 60% of purchasing professionals say they are part of the decision-making team when it comes to outsourcing.

The trend toward outsourcing is having a variety of effects on the purchasing profession. Nearly 40% of respondents say the trend is causing a decrease in the number of available purchasing jobs. On the flip side, nearly 30% say the trend results in a greater opportunity to work on more innovative projects as menial tasks are removed from the organization.

Despite the challenges, purchasing professionals say they are not overly concerned about the negative effects of outsourcing on the profession: The majority say they are either not concerned at all (49%) or not very concerned (32%) about the outsourcing trend.

“Good outsourcing requires skilled purchasing professionals,” one survey respondent said.

Why Electronics Industry Firms Outsource

What is the primary reason your company outsources?

To save time



To save money



To make best use of internal resources






Source: Global Purchasing, 2013

Manufacturing Services Top List of Outsourced Functions

What types of work is your company outsourcing?

Design services



Manufacturing services



Procurement/materials management services



Supply chain services









Source: Global Purchasing, 2013

About the Author

Victoria Fraza Kickham | Distribution Editor

Victoria Kickham is the distribution editor for Electronic Design magazine, SourceESB and, where she covers issues related to the electronics supply chain. Victoria started out as a general assignment reporter for several Boston-area newspapers before joining Industrial Distribution magazine, where she spent 14 years covering industrial markets. She served as ID’s managing editor from 2000 to 2010. Victoria has a bachelor’s degree in English from the University of New Hampshire and a master’s degree in English from Northeastern University.

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