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Article | November 30, 1997
Materials and container development lead outsourced functions (sidebar)
Can outsourcing save money?
It would seem that the answer to this question is elementary. And in fact PW quizzed respondents about savings in more detail asking about labor or material costs and even plant space. More details will be available in our second report.
However a survey by the American Management Assn. is casting some doubts on the "outsourcing equals savings" equation. In a recruiting newsletter AMA reports that only 25% of companies studied actually reduced their costs by outsourcing some services. Further it found that more than half the companies studied had already brought back in-house at least one function that it had previously contracted out. These conclusions were also mentioned by some respondents to PW's survey.
It's important to point out that AMA studied outsourcing far more broadly than just in packaging functions. While the survey showed that responding companies still outsource an average of nine functions these include services such as accounting information systems payroll and janitorial service. Actually the "white collar" functions like accounting and marketing are the functions that AMA says are growing fastest in outsourcing.
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