Rethinking Outsourcing in Manufacturing:: A Tale of Two Telecom Firms

Since the early 1990s outsourcing has been a major industrial trend. In the literature the economic advantages of outsourcing are often taken for granted. This article aims to take a detailed look at actual outcomes in terms of costs and competences. The focus is on outsourcing of manufacturing in the telecom equipment industry. The article builds on a comparative study of two leading firms, Ericsson (global leader in digital networks) and Nokia (world leader in cellular phone). The comparison reveals strikingly different strategies for production and outsourcing, which lends support for a critical rethinking of general outsourcing trends.