What is Global Sourcing?

Global sourcing is a procurement strategy in which a business buys goods and services from international markets across geopolitical boundaries to save money by using cheap raw materials or skilled labor from low-cost countries. Global sourcing can help businesses tap into advanced skills, resources and technology not available in their home country.

Business process outsourcing (BPO) is a classic example of global sourcing. Several companies have set up their call centers in Asian countries, such as India and the Philippines, to benefit from the availability of low-cost, skilled labor.

Global sourcing strategy has become a matter of intense debate. With the onset of the COVID-19 pandemic and the resulting supply chain disruptions, many businesses that relied on a supplier based in China experienced unforeseen disruption. In several cases, the dependence on a single region impacted business continuity. The absence of alternative suppliers meant that some of these businesses had to temporarily suspend operations, while a few others closed permanently. Learn more about GEP’s procurement sourcing software and sourcing services.