Vietnam and UAE the new LCCS options

Add comment July 17th, 2007 Sean Delaney - Iasta UK

Whilst it may have come as no surprise Vietnam has emerged as the new LCCS for manufacturing over China. United Arab Emirates is the new location for the service sector over India.

A new emerging-market index launched by PWC last week looks at “reward” factors with LCCS decisions including factors like production costs, size of market, taxes, transport costs and tariffs. In addition the index looks at risk premiums too.

According to the Index BRIC countries are no longer top locations for outsourcing your manufacturing or services. If you start to consider that 50% of manufactured goods could be sold locally and the rest exported, China comes second to Vietnam. What is more interesting for Europe is that Poland is third choice just behind China.

For services the index assumed that 10% of the output is exported in which case it would suggest that there is a heavy bias towards financial services rather than the out-sourced back office functions and call centres we have today. In such circumstances UAE came top with India in 18th place.

I think the important point here is that although outsourcing can deliver cost saving benefits we must always remember there is a potential market locally too. When this is factored into the sourcing decision our long term decisions may differ greatly that our original expected outcome.

Entry Filed under: Analysts/Research, General, Global Supply Issues/Risk