Low-cost country sourcing
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Low-cost country sourcing (LCCS) is procurement strategy in which a company sources materials from countries with lower labour and production costs in order to cut operating expenses.[citation needed] LCCS falls under a broad category of procurement efforts called global sourcing. The process of low cost sourcing consists of two parties. The customer and the supplier countries like US, UK, Canada, Australia, and West European nations are considered as high cost countries (HCC)[citation needed] whereas resource rich[citation needed] and regulated wage[citation needed] labor locations like China[citation needed], India[citation needed], Indonesia[citation needed], Bolivia[citation needed], Brazil[citation needed], Russia[citation needed], Mexico[citation needed], and East European nations[citation needed] are considered low cost countries (LCC)[citation needed]. In low cost country sourcing the material flows from LCC to HCC while the technology flows from HCC to LCC.
The primary principle behind LCCS is to obtain sourcing efficiencies through identifying and exploiting cost arbitrage[citation needed] between geographies.
[edit] Destination
Not necessarily all "low cost countries" are destinations for LCCS[citation needed]. Only those countries with relatively stable politic and economic environment, modern infrastructure and acceptably compatible legal system are considered to be ideal for sourcing[citation needed]. Examples and most popular regions[citation needed] are China, Indonesia, Thailand, Vietnam, Malaysia, India, Ukraine, Romania, Bulgaria, Mexico, Bolivia, Brazil and Czech Republic.
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[edit] See also
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