Why Outsource?

The benefits of outsourcing of course are variable, depoendent upon the nature and situation of the organization. However, the following is a list of common reasons why outsourcing is undertaken:

• Lower costs due to economies of scale
• Ability to concentrate on core functions
• Greater flexility and ability to define the requisite service more readily
• Specific supplier benefits. For example, better security, continuity, etc.
• Higher quality service due to focus of the supplier
• Improved internal management disciplines resulting from the exercise itself
• Less dependency upon internal resources
• Control of budget
• Faster setup of the function or service
• Lower ongoing investment required in internal infrastructure
• Greater ability to control delivery dates (eg: via penalty clauses)
• Lack of internal expertise
• Increase flexibility to meet changing business conditions
• Purchase of industry best practise
• Improve risk management
• Acquire innovative ideas
• Increase commitment and energy in non core areas
• Improve credibility and image by associating with superior providers
• Generate cash by transferring assets to the provider
• Gain market access and business opportunities through the supplier’s network
• Turn fixed costs into variable costs
  

OUTSOURCING ASSESSMENTT

Despite the size of this list, every scenario is different. There may well be equally compelling arguments against any sort of outsourcing arrangement.

It is therefore important that ALL the issues are considered before embarking upon the outsourcing course. This assessment should take into account all factors, both local and generic.

Author: THE OUTSOURCING MANAGEMENT ZONE