Offshoring-Outsourcing and Onshoring Tradeoffs: The Impact of Coronavirus on Global Supply Chain

Abstract

The world has become a global village with companies investing in different nations to remain afloat and competitive. In the process of offshoring- outsourcing, companies and nations have become interdependent in their efforts to bridge the supply chain network. However, during a pandemic, such as the Coronavirus (COVID-19) that involved the closure of borders, and during which there was a high demand of lifesaving machines and personal protective equipment, many countries were left scrambling for critical medical products such as ventilators and personal protective equipment for doctors. Hence, the tendency away from offshoring and outsourcing to onshoring production. COVID-19 has elicited that countries need to invest in an onshore business if they are to remain afloat. However, investing in onshore (local) business calls for a tradeoff, which some countries cannot afford. Many countries lack skilled labour (developing countries), and where available, it is too expensive (developed countries) making onshore an expensive venture. Besides, promoting manufacturing companies means increased air pollution and greenhouse gases that are responsible for 4.2–7.0 million premature deaths every year, and which costs $4.6 trillion per year. Such death rates and cost can hinder the onshore business. Therefore, for countries to survive in the era of a pandemic, the best alternative is to build strong ties with offshore-outsource nations.