Boom on way for lower-cost countries: Study

US and European companies plan to increase the amount of goods and services they source from suppliers in lower-cost countries by 85% within the next two to three years, according to a study released today by Accenture.

The study, based on a survey of 238 US and European executives, also found that 50% of companies that do not currently source goods and services from lower-cost countries — eg, China, Latin America and Eastern Europe — will begin doing so within the next two to three years.

Given the expected 85% increase in sourcing expenditures in lower-cost countries, survey respondents also anticipate saving an average of 22% on the goods and services they acquire from these countries.

However, these savings do not come without trade-offs. Among the principal concerns that respondents cited with regard to sourcing from lower-cost countries are long lead times (cited by 55% of respondents), insufficient product innovation (44%) and questionable delivery reliability (21%).