What Makes Global Sourcing So Popular?
Labor arbitrage continues to be the primary driver of global sourcing. The impact that labor arbitrage offers is far greater than that offered by other drivers of F&A outsourcing (such as economies of scale and access to new technology). For many organizations, centralization and investment in technology have become phenomena of the past, leaving little room for further improvements on these fronts. In such scenarios, global sourcing becomes all the more important as the only remaining avenue for further reduction in process costs. Although some fear that labor arbitrage may vanish in the future due to the rapid development of the traditional offshore locations, we believe it will remain significant for the next 15-20 years. In fact, the cost savings opportunity arising out of labor arbitrage will drive the global sourcing market to grow well beyond today’s levels. Eventually, other, more sustainable drivers (such as productivity/quality improvement, scalability, concentration of exper
