Archive:International sourcing

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Industrial restructuring has been one of the main economic developments in the European Union (EU) in recent decades, especially influencing the manufacturing sector, leading to debate over the deindustrialisation of Europe. A more recent trend, which has received a great deal of political and media attention, is the apparent increase in the international sourcing of services. The international sourcing of services is facilitated by technological developments, especially within Information and communication technology (ICT), allowing enterprises to codify and transfer information and knowledge globally. Another significant facilitator is increased globalisation within services markets as a consequence of market deregulation and trade liberalisation, including recent measures taken within the EU.

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Overview

As the majority of service functions require a proximity to markets and clients, the initial focus of international sourcing within services was centred on back-office functions (for example, IT services or finance/accounting), enabled by the increased use of ICT and internet connectivity. However, enterprises have more recently moved to delocalise various functions that focus on customer contacts (for example, the use of intelligent telephone software since the late 1990s, especially for call centres).

The phenomenon of international sourcing has a variety of labels and terms (often used without explicit definitions), such as:

off-shoring;
near-shoring;
delocalisation;
relocalisation;
outsourcing, or;
insourcing.

The somewhat generic heading of international sourcing has been chosen for this development project as there is no generally accepted definition for these phenomena.

The objective of this development project on international sourcing, which was launched in 2006, is to provide policy makers at a national and European level with relevant statistical information on the reasons for, the extent of, and the consequences of, international sourcing.

The project concentrates on international sourcing of existing functions/activities that are performed in-house or domestically sourced to either non-affiliated (external suppliers) or affiliated enterprises located abroad. It is important to emphasise that studies relating to the magnitude and impact of international sourcing are mainly based on anecdotal evidence, as no harmonised and internationally comparable official statistics are currently available.

Main findings

Based on the initial results for 12 European countries (in enterprises with 100 or more persons employed) between 2001 and 2006:

most international sourcing of core business and/or support functions remained within the EU;
international sourcing was most common among Irish, British, Danish, Finnish and Slovenian enterprises;
manufacturing enterprises sourced far more than enterprises active in other sectors of the economy: well over 50 % of Irish and British manufacturing enterprises participated in this process, and over one third of Danish manufacturing enterprises;
in Ireland, Italy, Sweden and the United Kingdom more core business than support business functions were internationally sourced;
among supporting business functions, the international sourcing of distribution and logistics, as well as marketing and (after-) sales was most widespread;
over the period 2001-2006, 16 % of enterprises surveyed moved some of their business functions abroad;
the main motivation for moving functions abroad was to benefit from a reduction in labour costs (45 % of enterprises – multiple answers possible).

Source data for tables and graphs

Tables and figures on international sourcing

Archive:International sourcing

Full article

Overview

Main findings

Source data for tables and graphs

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