International Sourcing:
Are Irish Enterprises
Relocating Activity Abroad?
Patrick Foley
INTERNATIONAL SOURCING (IS):
INTRODUCTION
• BACKGROUND
• PRELIMINARY RESULTS
– MOTIVATION
– PERCENTAGES ENGAGED IN IS
– TYPES OF PRODUCTION SOURCED
– DESTINATIONS OF SOURCED PRODUCTION
– BREAKDOWN OF JOB LOSSES & GAINS RESULTING FROM
IS
– STRUCTURE OF ENTERPRISES ENGAGED IN IS
– ENTERPRISES ADDITUDES TO IS
Patrick Foley
INTERNATIONAL
SOURCING
SURVEY
(2007)
Period covered by survey
2001 to 2006
Patrick Foley
International Sourcing
Insourcing
The movement of
production abroad
but within the
enterprise group.
Patrick Foley
Outsourcing
The movement of
production abroad
to non-affiliated
enterprises.
GENERAL INFORMATION
POPULATION
All Currently Active Irish
Enterprises Within
Selected Economic
Activities Having 100 or
More Employees
Used The CSO’s Central
Business Register
=>
Pop. Size (N) = 1292
Voluntary survey
636 Respondents
Patrick Foley
PRELIMINARY
RESULTS
Patrick Foley
Importance Of
Motivating Factors
% of Total Population Engaged In IS
0%
10%
20%
30%
40%
50%
60%
Reduction of Labour Costs
Reduction of Other Costs
Strategic Decision by Group Head
Focus on Core Business
Access to New Markets
Access to Specialised Knowledge/Technologies
Improved Quality or Introduction of New Products
Following the Behaviour of Others
Tax or Other Financial Incentives
OTHER
Very Important
Patrick Foley
Some Importance
70%
Enterprises Engaged In International
Sourcing, % of Pop./Sector Total
TOTAL
38%
MANUFACTURING
58%
TRANSPORT,
STORAGE &
COMMUNICATION
53%
REAL, RENTING
& BUSINESS
ACTIVITIES
0%
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34%
20%
40%
60%
80%
Business Functions Sourced
Internationally, % of Sector Total
Manufacturing
High Tech. Services
49%
Core
Distribution &
Logistics
30%
Marketing, Sales,
Call Centres
13%
23%
ICT
25%
17%
18%
D
Admin. &
Management
10%
15%
18%
11%
Engineering
R&D
4%
13%
0%
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29%
10%
20%
30%
40%
50%
0%
10%
20%
30%
40%
50%
Destination of Production
Sourced Internationally
% of Total Population
0%
5%
10%
15%
20%
25%
24%
European Union (15)
26%
10%
New Member States (12)
8%
6%
Other European
4%
10%
China
3%
4%
India
5%
5%
Asia Other
3%
8%
Core Function
USA/Canada
7%
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Support Function
30%
Destination of Support Functions
Internationally Sourced - Detail
18%
Distribution & Logistics
Marketing & Sales (Incl.
Call Centres)
ICT
16%
% of Total Population
14%
12%
10%
8%
6%
4%
2%
0%
European Union
(15)
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New Member
States (12)
Other European
China
India
Asia Other
USA/Canada
Job Gains & Losses Resulting
From International Sourcing
Proportion of Job Losses,
% of Total Job Losses
Transport
Storage &
Communication
2%
Proportion of Job Gains,
% of Total Job Gains
Real Estate, Renting
& Business Activities
10%
60%
21%
11%
Wholesale
&
Retail Trade
11%
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Manufacturing 77%
2%
6%
Construction
Group Structure Of Enterprises,
% of Total
Population
NOT an
Enterprise
Group
35%
Group Head
of an All
Resident
Group
9%
Population Engaged in IS
Global
Group Head
of an
Multination
al Group
5%
NOT an
Enterprise
Group
14%
Group Head of
an All Resident
Group
10%
A
Subsidiary
of a Group
51%
A Subsidiary of
a Group
67%
Patrick Foley
Global Group
Head of an
Multinational
Group
9%
Location of Global Group Head of
Subsidiaries, % of Total
Population
Outside EU
32%
Population Engaged in IS
Ireland
31%
Outside EU
39%
Inside EU
37%
Patrick Foley
Ireland
21%
Inside EU
40%
Barriers To
International Sourcing
% of Total Engaged In IS
0%
Taxation Issues
Legal or Admin.
Proximity to Existing Clients
Distance to Producers
Trade Tariffs
Difficulties Identifying Providers Abroad
Concerns of the Employees
Concern of Violation of Patents and/or Intellectual Prpoerty Rights
Linguistic or Cultural Barriers
Cost Benefit Concerns
Conflicting with Social Values
Very Important
Patrick Foley
Some Importance
10%
20%
30%
40%
50%
60%
Evaluating the Impact Of
International Sourcing
% of total engaged in IS
0%
Competitiveness
Reduction of Other Costs
Reduction of Labour Costs
Access to Specialised
Knowledge
Improved Qualityor Introduction
of New Products
Logistics
Inhouse Expertise
Access to New Markets
OTHER
Positive
Negative
Patrick Foley
10%
20%
30%
40%
50%
60%
Future Plans For International
Sourcing (2007 - 2009)
% of Total Engaged In IS
0%
5%
10%
15%
20%
25%
30%
35%
CORE
Distribution & Logistics
Marketing, Sales & Call
Centres
ICT
Admin & Management
Engineering
R&D
Increase
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Decrease
Summary
• Introduction to the IS Survey
• Preliminary Results
• More Information on the Survey
– http://www.cso.ie/surveysandmethodologies/news_survey.htm
Patrick Foley