Wednesday, December 08, 2004

The cost of outsourcing

Had planned a political posting, but too drained by today at work.

Can understand all the big picture arguments that outsourcing is good for the economy, but it's painful in the little picture reality. Our company is outsourcing to Puerto Rico & Mexico & Ireland. Understandably the company wants people to quit and has even coerced some out the door - helps to have an ex-sister company that's hiring. Unfortunately so many people are leaving, we have some very noticeable holes that either aren't being filled or "the req's open to replace them with permanent & temp workers".

The weakness in wanting folks to quit of course is that you can't fully select who you want to leave, so I'd be curious if some enterprising academic has ever studied the transitions costs of transferring production overseas. The lack of productivity when a product lines are leaving and the learning curve costs when the product lines show up overseas. Would also be curious to see the cost of added WIP. Previous company produced the components in the US --> Singapore produced the sub-assemblies --> US produced the final assembly. After several years (3-5) the entire line shipped over, but just can't believe the company saved much..any $$$ when shipping tons of inventory back-and-forth across the ocean.

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