A lot of companies have branches or subsidiaries around the globe. The ongoing process of greater economic interdependence among countries known as economic globalization is reflected in the increasing amount of cross border trade in goods and services.
However, directly investing and recruiting employees is not as easy at is seems. What are difficulties of the so called global sourcing?
Too much hassle
Setting up your own branch not only cost a fortune but also must adapt to new environment and regulations. Sometimes it takes years until it gets a green light.
According to the experiences of some multinational enterprises, they have to face problems like transportation, regulations, technological and capacity weaknesses in production, and lack of management systems.
Many developing countries identified for low cost global sourcing are subject to political uncertainty or even internal political turmoil. That risk needs to be assessed. Wouldn't it be more convenient to let a third party company handling the recruitment and payroll of the employee?
For foreign companies, because of the different cultures and different time zones, there can be other hidden costs when a company adopts global sourcing.
Global sourcing can lead to quality problems that, if not managed well, can damage the company's brand and result in a huge financial penalty.
It is almost impossible for the companies implementing global sourcing to avoid the issues of different regulations and cultures between various countries. Therefore the companies should strike a deal with a professional agency to handle these problems.