Purchasers urged to look beyond China and India

28 November 2005
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28 November 2005 | Geraint John

Buyers must look further than obvious low-cost countries to source goods, according to François Xavier-Terny, co-founder of the cost consultancy Masai.

Addressing delegates at the ProcureCon event held in Brussels last week, he said: "It's not all about China, China, China, although that's what many CEOs seem to expect."

He said both China and India would continue to be major sourcing destinations, particularly in electronics and IT services, but companies that were not already active in those markets may have missed the big savings opportunities.

Xavier-Terny said astute buyers were already looking at countries such as Morocco and Senegal for call centres, Romania for pharmaceutical contract R&D, and Armenia for software development - despite the greater risks.

Higher labour costs should not automatically rule countries out of the low-cost country sourcing equation, he argued. Taiwan, South Korea, Hungary and the Czech Republic were predicted to lose their labour cost advantage by 2009, "but they may still be worth using," he added.

Equally, favourable tax environments and other factors meant that the Irish Republic, Israel and France were "surprising low-cost countries" when it came to IT, aeronautics and chip cards respectively.

SMnov2005

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