Companies beginning to return back to Denmark

Outsourcing is getting too pricey, inflexible and bad for business

July 16th, 2014 10:47 am| by admin
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Danish companies are giving up on outsourcing to low income countries and are moving production back to Denmark, Epn reports.

According to a survey asking 651 union representatives from Dansk Industri, three quarters of companies that have outsourced production to countries where wages are low, like China or India, have shifted jobs back home in the last year. 

Companies are responding as production in Denmark increases, competitiveness improves and politicians favour industry by lowering taxes and removing fees.

Danish researchers: Not worth outsourcing to China

Bad quality
Jan Stentoft Arlbjørn, a professor who specialises in supply chain management at the University of Southern Denmark, explained that not all companies that venture abroad are satisfied with their outsource provider.

"A substantial amount move production back because the quality suffers, the total costs are too high and it's too inflexible," he told Epn.

"Many find that when they outsource to somewhere far away, they become just another number in the line in the eyes of the provider, who may not prioritise Danish companies very highly if bigger customers come along." 

Outsourcing continues
Arlbjørn said he still expects Danish companies to keep outsourcing some tasks despite the recent trend to withdraw.

"It's primarily standardised products that can be shipped along with a clear blue print that will still be outsourced," he said.

"Customised productions that require more specifications and continuous dialogue between the buyer and seller will remain home."

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