Research On Human Resource Cost Control At EMS Companies

With development of global economy and rapid expansion of electronic industry, there are more and more electronic devices available on the market and products upgrade is accelerating. EMS (Electronic Manufacturing Service) companies which provide manufacturing outsourcing services to OEM (Original Equipment Manufacturers) are gaining more popularity and expanding at a pace of 20% per year. Low Cost solution (attributable to economy of scale) is the key competitive advantage of EMS companies. Cost leadership will in turn convert to a more favorable market position in pricing and put company in a more profitable operation.EMS companies normally operate in large scale, hiring huge volume of employees, thus labor cost is a major part of overall cost. With development of macro economy and fierce competition among companies, talent attraction, retention and development are becoming major challenges, which subsequently pushing labor cost to be high. Rising labor cost against shrinking profit margin, rapid increase of employment cost against market position gained mainly through cost leadership, have become major conflict in operations of EMS companies.Human Capital is very different from other assets of company. Spending on human resource is more a kind of investment than pure cost, and it is an essential means to ensure employees are motivated and rewarded. Therefore, how to balance between labor cost control and investment to human capital at right level is a very critical issue faced by companies in terms of human resource management.This article is aimed at researching theories associated with labor cost management, quantifying human capital structure, studying generic problems faced by EMS companies, and exploring best practices in cost management and human resource management, to provide a reference controlling system to EMS companies, to help them improve ROI in human capital and sharpen their competitive advantage.