German Firms to Ease Outsourcing Conservatism
With the seemingly unstoppable internet popularity rise, tied up with consumers’ decreasing spending power, it is no surprise that even a hundred year old publishing firm would feel the pressure of staying on top of the business. Germany’s conservative corporate nature is then challenged by the times to rethink its existing business models.
Bauer Druck KG, one of Europe’s largest magazine publishing houses, with a projected 2008 turnover of Euro 1.79 billion and currently publishing 282 magazines in 15 countries, is now feeling the slow down in magazine demand. To remain profitable, the multinational company has decided to outsource its Post Press Department to yet an unnamed firm. The said department currently employs 133 Germans who are now at a loss as to what this new arrangement will bring to them as shared by an insider.
The acquiring firm will then have the power to determine the future of these 133 workers. They can be retrenched and replaced by lower cost workers or can be offered a lower salary than they currently have.
Lower cost laborers are easily available in Germany’s neighboring countries such as Russia and Poland. Although worker supply is within reach, the harder part will be going around the stringent protective German labor laws and the country’s conservative business model.
Outsourcing has never been a foreign word to Germany. With great demand for skilled workers and low supply of local workers, the country has benefitted from outsourcing to fill in these gaps. Outsourcing has also received a lot criticism from Germans as unemployment rate rises and jobs are moved to neighboring countries like Poland, Russia and Czech Republic.
BBC reported last year that high end German car maker BMW has outsourced its plant production to South Carolina to boost production to 240,000 units by 2012 and pay less wages in euros. The $750 million investment was said to create 500 jobs and employee cuts in Germany totaling to 8,100 jobs.
German business software giant SAP also currently outsources some of its work to IBM Philippines and Supply Chain Management Philippines according to anonymous IBM employee.
Predictions are strong that with the tough times, the German firms outsourcing conservatism would ease and more Central Eastern European countries inter-cooperation will take place. CEE could gain from manufacturing industry outsourcing due to geographical advantage. Asian countries like the Philippines might find a good advantage in the financial and IT sector outsourcing due to more supply of professionals at better salary rates. Although language and cultural difference might make it more challenging as CEE has more German speaking professionals as compared to the Philippines.
Author: Chris V.
Tags: german outsourcing
May 8th, 2009 at 9:57 am
[...] German Firms to Ease Outsourcing Conservatism [...]
June 15th, 2009 at 1:55 pm
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