Cheap workforce remains lure of low-cost countries

13 May 2008
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14 May 2008 | Paul Snell

Cheap labour continues to be the major driver for sourcing from low-cost countries according to research.

A survey of 200 purchasers worldwide by events firm eyeforprocurement revealed the lower cost of staff abroad is the prime reason for low-cost sourcing for 62 per cent of buyers. This is a rise compared with 2007, where the figure was 54 per cent.

The number of companies experiencing pressure to reduce prices also increased, up from 33 per cent in 2007 to 49 per cent this year. But access to cheaper raw materials has become less of a concern, falling from 43 per cent to 41 per cent.

China remains the prime low-cost location, with 76 per cent of buyers sourcing there. India was the second most popular area, with Eastern Europe also seeing a significant rise - up from 24 per cent in 2007 to 42 per cent this year.

The study also found over a quarter of buyers are sourcing more than $25 million (£12.9 million) from low-cost countries. The biggest barriers to sourcing cited were the immaturity of suppliers in regions, and the increasingly complex nature of transport and logistics.



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