Companies have been outsourcing their production, back-office and customer service functions to low-cost countries for some years. Now the opposite seems to be gathering momentum, fuelled, in part, by innovation and corporate social responsibility. Pressure from customers and other stakeholders means many firms are tightening up their social, ethical and environmental standards. Another factor is the silo effect – the feeling that physical distance has a negative impact on interaction between key customers, IT experts, designers and engineers. NCR is a case in point. The company recently moved manufacturing for its top-end ATMs from China and India to South Carolina.
Backsourcing started off as a US trend linked to politics and local employment issues, but it’s now gaining traction worldwide. Steif, the German toy company, is another example, moving factories back home from China. As other key trends begin to overlap, localism is winning out over globalism. This isn’t to say that backsourcing (sometimes known as industrial repatriation or re-sourcing) trumps outsourcing but it‘s still highly significant. The trend also looks likely to grow as higher oil prices and resource shortages take their toll on logistics and supply chains.