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International sourcing of business functions: new Eurostat survey

Aug 19, 2013 | News

(19 August 2013) – The continuous globalisation of the economy has pushed many enterprises to adopt international sourcing as a business model, i.e. move certain business functions that were performed in-house or domestically sourced by the resident enterprise to either non-affiliated or affiliated enterprises located abroad. To find out more about this phenomenon, a new Eurostat survey gathered data on international organisation and sourcing of business functions in 15 European countries.

The survey results, which cover nearly 40 000 businesses each with more than 100 persons employed, reveal that for the period 2009-2011:

  • The highest share of sourcing internationally is found in small, open economies with high labour costs.
  • Sourcing is still mainly driven by manufacturing enterprises that are increasingly sourcing support business functions.
  • The number of enterprises sourcing knowledge intensive support functions is growing.
  • Proximity is a major factor in sourcing, with domestic sourcing being more prominent than international sourcing and with international sourcing mainly taking place within Europe.
  • Direct employment consequences are limited but their cumulative and indirect effects should not be underestimated.

China and India are both important locations for business functions sourced from the EU but they attract different types of business functions. Not surprisingly, China is strong in attracting core business functions, generally in manufacturing.. On the other hand, EU countries are more likely to source support functions to India than to China, especially France, Ireland and Finland.

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