Outsourcing Electronics Manufacturing To Asia

While the outsourcing industry in the United States has been a source of recent fear and controversy, America’s history of outsourcing dates back to the industrial revolution of the late 17th century. Covered wagons were covered and clipper ships sailed with outsourced products from Scotland, with raw materials originating from India. Even the ancient Chinese and Japanese empires outsourced to their conquered nations. In the United States many computer companies outsourced payroll processing during the 1970s and 1980s.

Globalization, explosive Internet growth, and development of an information society has made outsourcing an integral part of the world economy. American companies such as Intel and Sun Microsystems maintain large research and development departments outside the United States. The United States has a depleting talent pool in technical fields, while China produces the largest number of computer engineers every year. Software outsourcing is a $ 1.5 billion market in China with an annual growth rate of around 35%.

Although the Asian market for IT outsourcing is promising, it does suffer from a lack of English language proficiency and Chinese companies do not have established quality control procedures such as those which are commonplace in India. The problem of software piracy in China does not help it become a credible destination for software development either. While the Internet is spreading in Southern Asia, a weak infrastructure, antiquated legislations, language barriers and the cost of Internet access seem to be hampering growth in IT outsourcing opportunities.

Therefore, the future of outsourcing in Asia may not be in the expected areas of IT services; it seems to be making a move towards electronics manufacturing and design. Among a diversity of services currently being outsourced to Asia are printed circuit board manufacturing, including complete layout design and creation. Electronics manufacturing in Asia takes advantage of the inexpensive labor costs. The industry recognizes the region’s increasing proficiency in computer and electronics engineering, while avoiding many of the pitfalls which have been experienced with IT outsourcing in the region.

The IT sector has proven offshore outsourcing can succeed, however the largest opportunities in outsourcing are yet to be realized. It is evident the practice of outsourcing electronics manufacturing to Asia will be an integral element of future outsourcing trends.

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