Employment effects of International sourcing in the Netherlands

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Employment effectsof International
sourcinginthe Netherlands

• 13 March 2008
• Gusta van Gessel-Dabekaussen
• Mark Vancauteren
• Statistics Netherlands

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About the survey

• Population 4633 enterprises with 100
  employees (manufacturing and services)
• Sample 1503 enterprises
• Response 1002 enterprises

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About the stratification

• Weight population / response
• All branches are equally represented in the sample

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About the response
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International sourcing 2001-2006, general results
(1)
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International sourcing 2001-2006, general results
(2)
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International sourcing 2001-2006, general results
(3)
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International sourcing 2001-2006, general results
(4)
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Plans in 2007-2009
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Intermediate conclusion (1)

• Survey is a direct and clear method for measuring
  employment effects of international sourcing
• As a result the figures must be interpreted with
  a certain degree of caution, because about a
  quarter of the respondents reports do not know
  about the effects on employment
• The results refer to employment effects in the
  enterprise. Outsourcing also will cause
  employment effects out of the enterprise

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Intermediate conclusion (2)

• The results refer to employment effects from
  point of view of the enterprises. Long term
  effects are not always known
• The survey in the Netherlands only concerns
  enterprises with more than 100 employees. Of
  course also smaller enterprises are involved in
  international sourcing with employment effects
• Survey causes burden for enterprises

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More statistic analysis

• Principal component/factor analysis
• Describes the covariance relationships among
  variables in terms of a few underlying
  components/factors
• Useful for distinguishing data variables from
  concepts.
• Small area estimators
• - Estimation of small area statistics from a
  sample designed for making large area statistics.

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Factor analysis on reasons for international
outsourcing

• Is it possible to identify patterns in the
  questionnaire that focuses on the reasons why
  firm engage in international outsourcing?
• Do these (possible) patterns differ across the
  type of international outsourcing (fragmentation
  of core versus support activities)

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Factor analysis (2) outsourcing core business
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Factor analysis (3) outsourcing support
activities
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Summary factor analysis (4)
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Summarizing the results (I)

• Displacement of employment is signficant
• About 9000 jobs mostly in manufacturing!
• Bias towards low/medium skilled employment
• Most important reason for international
  outsourcing is cost related from which the labour
  component is the most important one.
• Factor analysis suggests that international
  outsourcing follows a strategic business process
  that gives a unique competitive position through
  reaping the cost advantages

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Results Conclusion(2)

• Outsourcing the core versus support activities
  are commonly determined by strategic
  considerations!
• Cost motivation differs in importance and type