The Evolution of Outsourcing

  Manufacturing  

To understand smartsourcing, it’s a good idea to back up and look at how outsourcing has evolved over the past 50 years. Then we’ll go on to explain the difference between outsourcing, offshoring, insourcing, nearsourcing and smartsourcing.

 

While outsourcing has been getting a lot of attention over the last few years, American companies have been outsourcing since the 1950s. Simply defined, outsourcing is contracting a process--manufacturing or distribution, for example--to an outside company in order to reduce costs. By the mid-1970s, manufacturers were being attacked by Congress and trade unions for "stealing" American jobs. It was true to a large extent. Many large, well-known clothing companies, for example, had their products manufactured in Pacific Rim countries because labor there was dirt-cheap.

 

By the late 1980s, technology had made outsourcing easier and cheaper. Outsourcing services such as accounting, programming and telephone answering has saved American corporations billions of dollars over the last two decades.

Critics of outsourcing were outraged that so many industries, many of which manufactured consumer or business products, were shrinking--and even disappearing--because of it. But outsourcing was also a lifeboat for hundreds of companies that would have perished if part or all of their manufacturing operations …