Shifing factories abroad leads to productivity drop, says CPB

Companies which move key parts of their production abroad end up seeing their productivity shrink by an average 10%, according to a recent report by the government’s macro-economic think-tank CPB.

‘Companies often underestimate the differences in culture and in rules and regualtions,’ researcher Henri de Groot told the Financieele Dagblad.

This means companies work more inefficiently than on home soil and end up with a more complex corporate structure to manage.

Companies which ‘offshore’ core activities to low-cost countries are most vulnerable, De Groot says. ‘We are talking about what can be very complicated processes and it often goes wrong,’ he told the FD.

In addition, companies which set up their call centres abroad may add a couple of percentage points to their productivity rate but would do even better by contracting a Dutch firm to do the work, the FD quotes the report as saying.

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