Offshoring may not all be bad for economy

Offshore outsourcing and its impact to the wider community and economy has been the topic of much recent debate in the procurement profession.

The Procurement Intelligence Unit (PIU) argues that buyers should offshore with pride in the knowledge that they are strengthening their home economies.

However a recent blog by Paul Teague on the Procurement Leaders Blog, has cited a number of examples where jobs have been lost after businesses relocated their facilities to an overseas destination.

"I assume these were good business decisions made after some rigorous analytical process. But, understandably, such news irks ordinary workers, especially with unemployment so high [up to 10% in the US],” Teague said.

Other detractors also argue that outsourcing arrangements increase unemployment and effectively shift jobs to foreign competitors. They argue that this work is often outsourced to states that have unfair trading practices.

Despite this argument, Jonathan Webb of PIU, believes that opponents of outsourcing are in fact proponents of economic nationalism.

“Jobs losses in one country are recouped elsewhere - normally in a poorer nation in need of development and opportunity. This creates development and richer trading partners for the [origin country of trade],” Webb said.

“Furthermore, the benefits of a cheaper (and more efficient) supply chain accrue to the general public as well as the business. Outsourcing should result in lower prices, which free up resources throughout the economy elsewhere,” he said.

Over time this has the potential to result in the accumulation of capital and further opportunities to generate real jobs that add real value to the global economy.

Procurement should not feel guilty in removing jobs from their domestic base, but trust in the 'invisible hand' to guide them to make decisions which have a positive impact.

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