After years of large-scale outsourcing and offshoring, a number of onshoring initiatives in both the manufacturing and service industries have left many executives wondering if a major trend reversal is occurring.

The answer, according to our analysis, is simply that many leading companies now have a broader set of options when they source. To do that optimally, they define bundles of activities that should be sourced consistently and select the best option for each bundle: offshoring, nearshoring (locations in neighboring countries), farmshoring (lower-cost locations in the company’s home country), or onshoring. Today, sourcing strategy focuses increasingly on value-creating factors that go beyond labor costs, which was the primary driver of sourcing in the past.

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