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Jan 17, 2010

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Outsourcing is not only about cost, but it is rarely viable unless there are cost savings.

If the motivation behind outsourcing is to force change into business operations, cost is almost always utilized as a key metric. In my experience, intelligent outsourcing (not just offshoring, but even domestic outsourcing) can provide a strategically oriented company with the nimbleness and flexibility that can never be acheived by staying completely in-house.

An effective outsourcing strategy involves more than just cost reductions - it targets the accessing of expertise and capabilities that are either beyond the reach of the company, or more affordable than developing those capabilities in-house. In addition, for some companies, outsourcing provides an opportunity to secure third party or objective perspectives on particular business issues, and forces a company out of the "not-invented-here" sydnrome that can effectively burden a company with the weight of limited in-house expertise and lack of vision.

Outsourcing has become a hot-button term, but in fact, every single company in some way, shape, or form does in fact outsource, whether it is IT expertise, legal advice, or manufacturing. IF the outsourcing label hinders a company or management from pursuing an otherwise credible strategy, the company is doomed to shortly find itself atop the scrap heap of slow, inflexible, and ultimately stubborn-to-the-end firms who couldn't match their competitors in the global marketplace and were relegated to oblivion.

Elisha Tropper

Phil,

Interesting viewpoint here. Large firms clearly like to do things "their way" and use outsourcing more as a cost-reduction driver, whereas the smaller, less-resources firms actually need to access technical (and other) expertise, and outsourcing provides a means to do that,

Great article - look forward to the next piece from this study,

Andrew Reeve

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