Is outsourcing really offering you a competitive advantage?

Outsourcing

Is outsourcing really offering you a competitive advantage?

I recently saw a topic post on LinkedIn promoting "Outsourcing as your competitive advantage" which got me questioning the validity of the statement. Before I proceed too far into this article let me offer a warning to those looking for a non-outsourcing solution to their problems or a lengthy rebuttal on the ineffectiveness of outsourcing. Sadly this article is not going to the the silver bullet for which you have been searching. In fact quite the opposite. 

Outsourcing, many years ago, was a strong competitive advantage for those companies "in the know". They had access to ridiculously low pricing when their competitors were paying premium dollar. This is back in a time when outsourcing was a relatively new phenomenon and finding service providers to outsource your activities to was a difficult and often unsurmountable task. Outsourcing is now such a mainstream activity that I would argue, if your sole competitive advantage is your claim to be able to outsource a particular function or product, you may need to start digging a little deeper to truly stand out from the crowd. 

From my consideration, a competitive advantage stops being so once the majority of your competitors have adopted the same practice. You all return back to a level playing field and need to find other way to distinguish yourselves.

Consider Apple's first iPad back in 2010. They marketed the device on the touchscreen user interface and usability. Something you could use as a computer but hold in your hand (for a short while considering the initial weight). Having a personal computing device that did not need mouse or keyboard peripherals was a major competitive advantage for Apple. They were not actually the first to produce such a device but they were the first to thrust the technology into the mainstream. Three years later, there may be feature that members of the purchasing public find as preferred in Apple devices, but having a touchscreen no longer belongs in this category. It is now an expected feature, not only in Apple devices but also across a myriad of platforms. Having a touchscreen is no longer a competitive advantage. Conversely, NOT having a touchscreen is now often a serious disadvantage to the market of your product.

The same applies to outsourcing. Getting your costs down by outsourcing non-essential tasks is an expected activity in most industries (unless the industry is subject to a local buy clause imposed on their customers or the cost of their products is not a consideration in the purchasing decision). The level of competency you display in undertaking the outsourcing tasks offers some competitive advantage but just simply considering the fact that you outsource as a source of advantage is not a sound business thought. 


Brian Le Mon

Principal at

Isn't it time you re-evaluated your International Supply Chain setup? If there is one thing 2020 taught the world, it is how fragile supply can become when the majority of the world's manufacturing is conducted in the same country. If we are being honest with ourselves, China has not offered a significant financial or capability benefit for several years now. Ever increasing wages and operating costs compounded with the desire for those traditionally employed as factory staff to better their life and livelihood has pushed manufacturing costs up and the inherent IP risk has never really been resolved. Now with trade wars and retaliatory "anti-dumping" fees / embargos for Australian products imported to China coupled with growing consumer resentment around the "Made in China" tag, it is becoming more and more the time to re-evaluate. There are a multitude of options outside of China as well as the possibility of return to local manufacture for some products but it is best to have a definite plan on your future strategy and actions required to get there. EQP can help you to plan and execute your future sourcing and manufacture strategy by working with you and potential manufacturing partners either locally or offshore to ensure that any move away from China does not result in a drop in capacity or quality whilst potentially saving you money. There is no better time to plan for the future than today. Get in touch to explore your options and resolve some of your Supply Chain headaches.


Comments (1)
User
Yazmin Barajas

Yazmin Barajas

Well actually it depends, but almost all of the businesses are being more competitive when they outsource. I think the problem here is when and what to outsource in order to gain more competitive advantage. Offshore outsourcing can help your business to be more efficient and to be more successful. Outsourcing can give you edge and right help in order to overcome problems like expenses and costs etc. It can also save you time and effort.


Yazmin Barajas, Offshore Marketing
OBP Australian Offshore Services Outsourcing