Outsourcing
Outsourcing is defined as the procurement of products or services from sources that are external to the organization. For services, this usually involves the transfer of operational control to the suppliers
While outsourcing can often help control costs, simplify operations, and keep a company focused on its core competencies, it will not work unless it is properly implemented. Here are some guidelines:
– Determine what business you are in. Quickly jot down the company’s core competencies and primary sources of revenue. Obviously, these functions and processes are areas that you don’t want to outsource. Whatever isn’t on this list, however, may be outsourced
– Look for outsourcing opportunities. Similarly, find the functions or processes within the company that don’t make the company unique or offer a clear competitive advantage over other businesses. Such non-strategic areas can often be outsourced
– Evaluate costs. Try to determine just how much is being spent on a function and whether or not it can be done more cheaply by an outside company.
– Set objectives. Realistically decide what an outsource partner can do for the company. Whether it is to cut costs, improve focus, or free up resources, make certain the goals are attainable
– Be cautious. Don’t select an outsource partner without careful examination. After all, that business will be your company's representative to both employees and customers
– Monitor. If you decide to outsource, set up regular performance reviews or similar criteria to measure the provider’s performance. Outsourcing isn’t an excuse to overlook an aspect of your business
– Be flexible. Even after deciding to outsource, look at ways it can be improved. Don’t be afraid to make changes in the ways a process is being handled
– Don’t jump on the bandwagon. Just because outsourcing is a growing trend doesn’t mean it should be automatically embraced. If a change isn't needed, don't make one just for the sake of it
⠀ Lankford, W. M., Parsa, F. (1999). Outsorcing: a primer. Management Decision, 37/4, Pp. 310-316 (p. 310)
⠀ Lankford, W. M., Parsa, F. (1999). Outsorcing: a primer. Management Decision, 37/4, Pp. 310-316 (p. 313)