Outsourcing has taken new meaning amid the recovery phase and various industries are seeking to cut costs by sending work overseas to top outsourcing countries. But that might come at a price.
Technology Investment Network director Greg Shanahan says, “If you divest manufacturing out of your value proposition and don’t have that close integration between manufacturing and design and development you potentially abdicate a competitive advantage,” reports globalservicesmedia.
He adds, “A lot of the time it’s that close collaboration that’s made these companies competitive in the first place.”
This is particularly true as software firms and web design firms are commonly hired to do tech projects from firms that are capable of doing these projects themselves sometimes, IT work might not fall into the area of core competencies for a given firm.
Aircraft manufacturing firm, Pacific Aerospace, make planes that are designed to fly from remote places with short landing strips. It has reeled in $39 million in 2009. It does its manufacturing by itself and it is no wonder it leads the pack when it comes to this category of airplanes.
Analysts say that China is a manufacturing monolith. More than that, it has already invested in research and development on a large scale, to the extent that New Zealand is no longer a leader in R&D. “If they have both an innovative edge and a low-cost advantage, where does that put New Zealand?” says Shanahan.
While New Zealand has a successful software product, software development can easily turn into a ‘cottage industry’ with the barriers to entry being very low. Almost anyone with the know how required to churn out software can get into it. However, the industry’s best is when hardware and software are combines, such as the case with Fisher and Paykel Healthcare and Compac Sorting Equipment. These companies were among the top ten highest earning tech firms last year, taking in $458.7 million and $75 million in earnings.
According to Shanahan, the fact that New Zealand’s distance from major outsourcing markets is an obstacle a valid point. He adds, “International companies expect to do business with companies from exotic locations … including New Zealand.”
Talking about the overseas acquisitions taking control over local firms, Shanahan says, “The rate of growth in New Zealand-owned companies has more than compensated.”
Additionally, while volatile exchange rates are a problem, specifically with the U.S. greenback, tech firms have become more sophisticated at managing the currency issue. They are also getting good at managing and marketing as well. The technology industry in New Zealand currently employees roughly 23,000 employees.
Source:http://www.groundreport.com/Business/Outsourcing-Not-At-The-Expense-Of-Competitive-Adva/2924628
