Global sourcing is a process of sourcing goods and services from the international countries across geopolitical boundaries. The main purpose is to exploit global efficiencies such as lower cost skilled labour, inaccessible raw materials and other economic factors like tax breaks and low trade tariffs. For a variety of reasons, procurement manager at many companies are considering whether or not they should be buying products from international sources.
Companies are facing higher expected costs of materials and labour than sourcing locally. Many companies are still making procurement decisions based primarily on unit cost however there are still companies making global sourcing decisions based on inaccessible technologies and well-educated workers. A successful global sourcing will give a tremendous opportunity to reduce costs, especially labour cost.