To off-shore or not to off-shore

February 3, 2005
/ Print / Reprints /
ShareMore
/ Text Size+
A strategy today that is gaining significant management attention is the off-shoring of work. Many companies have experimented with sending work overseas and a number of global companies have set up centers to execute work in countries that have lower wage rates or better availability of highly educated professionals. However, as seen in this past Presidential election, this subject is highly sensitive and political. Bill Wallisch, a senior consultant to major companies like General Mills and Coca-Cola, calls off-shoring "the big whisper. Everyone is talking about it, but in very sensitive and measured tones."

A number of companies have chosen to off-shore certain areas of their information, software development and support, benefits and financial services functions. However to date, the food manufacturing industry is taking a slow approach to off-shoring its engineering work. Several companies have trial projects underway with overseas engineering services firms-most in generic skills or administration areas. Others are experimenting with leveraging their own internal international structures to augment their US capabilities and gain some cost efficiencies. Another approach has been to leverage work completed by US engineering services firms by having work completed in their international offices, where rates are less than US offices. In fact, several large US engineering services firms have offices or joint ventures in Chile, Romania and other Eastern European countries, as well as India and China.

At this point, all of the food industry trials are reported to be in the evaluation stages. There is also a growing concern on the protection of food companies' intellectual property and operational efficiencies. Even when there are legal agreements in place, it may be difficult to keep the proprietary knowledge controlled in large organizations where the information can move instantly. Secondly, it is clearly understood that low rates do not translate into lower engineering costs if you cannot achieve the efficiencies and quality of the work. No one expects to see a short-term payback from off-shoring due to the startup/training/coordination costs and the resulting inefficiencies. The current estimates are for a three-to-five year payback over in-house engineering.

Did you enjoy this article? Click here to subscribe to Food Engineering Magazine.

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

Plant of the Year 2014

Blue Diamond Growers was chosen as Food Engineering's 2014 Plant of the Year. The Sacramento-based company is the world’s largest producer of almonds and almond ingredients.

Podcasts

Burns & McDonnell project manager RJ Hope and senior project engineer Justin Hamilton discuss the distinctions between Food Safety and Food Defense as well as the implications for food manufacturers of the Food Safety Modernization Act.
More Podcasts

FSMA Audit

What is the is most important step you have taken to become ready for a FSMA audit?
View Results Poll Archive

Food Engineering

FE September 2014

2014 September

The September 2014 issue of Food Engineering explores how lean manufacturing, quality improvements and increased automation helps processors meet rapidly changing demands. Also, read how robotics, advanced machine controls, software and OEE are just a few of the tools that can boost productivity on packaging lines.

Table Of Contents Subscribe

THE FOOD ENGINEERING STORE

Food-Authentication-Flyer-(.gif
Food Authentication Using Bioorganic Molecules

This text provides critical tools and data needed to augment routine food analysis and enhance food safety by aiding in the detection of counterfeit, and potentially deleterious, foods.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Food Master

Food Master Cover 2014Food Master 2014 is now available!

Where the buying process begins in the food and beverage manufacturing market. 

Visit www.foodmaster.com to learn more.

STAY CONNECTED

FE recent tweets

facebook_40.pngtwitter_40px.pngyoutube_40px.png linkedin_40px.pngGoogle +