Buying Office Model :The Rising Cost of Procurement Teams in Asia
Is the smart move to outsource offshore sourcing and procurement and move to a unique buying office model As global trade becomes ever more dynamic, companies in Europe and North America have long pursued offshore global sourcing strategies to capitalize on the cost advantages offered by Asian markets, building competitive advantage and operating margins. Over the past two decades, establishing procurement and buying teams in countries like China, India, Vietnam, and Malaysia was synonymous with significant savings—helping businesses access cheaper labour, accelerate growth, and drive competitiveness. However, recent trends suggest the long-established logic for employing global procurement teams in offshore markets is shifting. With overhead and operational costs rising sharply for on-the-ground teams across Asia in the last three years, companies are having to re-examine whether offshore buying offices truly deliver the value they once promised.
The Evolving Cost Landscape for Asian Based Procurement Teams
\Multiple factors are converging to drive up the cost of maintaining dedicated procurement teams in Asian markets:
- Wage Growth: Salaries and benefits in key Asian economies—especially China and India—have risen substantially as these markets mature and local talent becomes more expensive
- Real Estate and Utilities: Office rents in major cities like Shanghai, Deli, Bangkok, and Ho Chi Minh City have surged, adding to baseline overheads for offshore offices.
- Recruitment and Retention: Highly competitive labour markets have prompted increases in bonuses, incentive programs, and costly recruitment campaigns as companies vie to attract and keep skilled procurement professionals
- Regulatory and Compliance Costs: Evolving labour laws and increasingly stringent regulatory environments require additional local expertise, legal support, and compliance-related investments.
How Much Have Costs Increased for Asian based Buying Teams?
Recent studies and industry benchmarks indicate that the total annual cost of a procurement team in Asia (factoring in salaries, benefits, management overhead, infrastructure, and hidden costs like communication, coordination, and training) has grown steadily since 2022. According to one detailed breakdown, annual team overheads in low-cost Asian markets jumped between 10-25% in the last three years, propelled mainly by salary inflation and secondary expenses such as real estate and compliance requirements.
A typical offshore procurement manager in Asia might have seen a salary increase of 8-12% year-on-year, with overall cost structures expanding even quicker in fast-growth hubs. Hidden costs—such as lost productivity from time zone issues, increased knowledge transfer demands, and rising internal management needs—further erode the traditional cost advantage.
| Cost Component | % Increase (2022–2025) | Notable Drivers |
|---|---|---|
| Base Salaries & Benefits | 15–25% | Wage inflation, competition |
| Office Rents & Utilities | 10–20% | Urban real estate demand |
| Recruitment & Training | 20–30% | Shortage of qualified talent |
| Regulatory/Compliance | 15% | Stricter laws, ESG requirements |
| Communication/Hidden Expenses | 10–15% | Complexity, time zones |
Estimates based on regional market data
How Asian based Souring teams can become a False Economy
The original premise behind setting up in-country buying teams was simple: reduce costs and gain greater control over local suppliers. But as overheads surge, the all-in cost of maintaining these teams is chipping away at the initial savings. Add hidden and indirect expenses (such as delayed lead times, inventory management, quality issues, and the need for frequent long-haul travel), and the math becomes even less favorable
For many firms, this phenomenon—rapidly rising base costs erasing labour arbitrage and creating layers of operational complexity—means that the “cheap” offshore office can turn into a costly and cumbersome extension
The Emerging Solution: Leveraging Global Sourcing Companies
With the cost-benefit equation for offshore teams worsening, CEOs and CPOs are reconsidering how best to approach Asian sourcing. Increasingly, businesses are outsourcing procurement activities—or elements such as supplier search and validation, quality and compliance, contract negotiation, and logistics management—to specialized global sourcing companies instead of maintaining large in-house offices.
A further development of this trend is the move to unique buying office models, a specialist bespoke business model that can deliver all the commercial benefits of Asian sourcing whilst mitigating the risk and cost escalation of employing a new team.
ET2C International Global Sourcing Experts
ET2C are a British owned global sourcing company with 23 year’s experience working with our clients to make their sourcing simple. Our 200 colleagues are based on the ground in major sourcing markets China, Vietnam, India and Turkey to give you rapid market access, supplier selection and validation, quality and compliance management and vendor management. As one of the Worlds leading Global Sourcing companies delivering a unique buying office model.
Our unique buying office model allows companies to deliver the commercial benefits of dedicated teams on the ground in major sourcing markets without the risk and cost factors involved in establishing teams and premises. We have been running this model extremely successfully for over 20 years with international clients. The bespoke nature of our model can accommodate all companies from multi nationals to brand start-ups. Delivering speed of set up and the agility to work in multiple sourcing markets.
To learn more about unique model and its capabilities to build you margins whilst reducing risk contact@et2cint.com or visit us at www.et2c.com
Case Study: Maximizing Cost Efficiency Through Outsourced Sourcing
A North American electronics brand that once operated a 20-person buying office in Shenzhen recently transitioned to using a global sourcing company based in Vietnam and Malaysia. The result? Direct annual overhead fell by 38%, productivity increased through digital workflows, and supply chain risk was reduced by spreading buys across multiple countries. Such moves allow businesses to remain agile, focus internal teams on strategic priorities, and recapture the core advantages that initially drove the offshoring trend.
A New Chapter for Global Sourcing and Procurement
Strategic Recommendations
- Rethink Team Structures: Undertake a thorough cost analysis of your offshore operations, factoring in hidden and indirect expenses.
- Explore Partnerships: Evaluate sourcing companies with proven track records in your main buying regions and experience with major clients.
- Prioritize Flexibility: In turbulent markets, retain the ability to scale procurement resources up or down based on demand without locking into high fixed costs.
- Review Buying Office Models:ET2C unique buying office model can deliver rapid improvements in operating margin, reduce employment costs and deliver the agility to work in all major sourcing markets
The Bottom Line: The Case for Outsourcing Sourcing and Procurement Teams
For companies in Europe and the USA, the story of Asian sourcing is evolving. As tariff policy evolves continuing to cause long term planning issues for may sourcing and procurement team are bringing an additional layer of complexity to global sourcing.
The substantial increases in procurement overhead costs over the last three years are shaking up long-standing cost models—threatening to turn offshore buying teams into a false economy for all but the largest or most specialized organizations. Embracing new models—especially by leveraging global sourcing partners and innovative sourcing and procurement models—can help restore efficiency and ensure that global sourcing continues to deliver real, sustainable value in the years ahead.
ET2C’s unique buying office model is an example of flexible sourcing and procurement model that can deliver:
- Rapid margin benefits
- Sourcing market agility to encompass India, China, Vietnam and Turkey
- HR and Regulatory Support
- Recruitment support in market
To explore how this unique business model could reshape your Asian sourcing cost base in 2025 drop us a line for a free consultation
David Young
Position: Group Marketing Director
David Young is an experienced strategic sourcing commentator and thought leader with over 20 years of marketing and innovation experience. Connect with David on LinkedIn or david.y@et2c.com.
