The outsourcing business model has been adopted worldwide across both the private and the public sectors and it provides multiple benefits. It enables an organisation to achieve business objectives, add value, tap into a resource base and mitigate risk. In other words, from individual items all the way to systems management, choosing to use external providers allows the organisation outsourcing a job (the “client”) to focus on what it does best.
As at 2010, global outsourcing industry was worth 0ver 1 trillion USD annually; with India hauling a whopping $50 Billion; China $15Billion with the remainder split among other countries.
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There is no denying the benefits derivable through outsourcing. However, for an organisation to get the best of outsourcing, salient factors must be put into consideration before delving in.
Choosing an Outsourcing Provider is not a difficult task, but it can be complicated. It is possibly the most critical part of the entire road to outsourcing. Treating vendor selection and management as nothing more than a procurement decision is an approach that does not work because procurement is generally seen as achieving a given service for the lowest price possible. This approach may work for purchasing office furniture, but not for strategic outsourcing. This article will take you on a step by step journey of choosing the right outsourcing partner for your organisation.
At the turn of the century, there only existed two main activities that were outsourced. These were primarily information technology support services and high volume manufacturing contracts. However, the range of possible activities being outsourced today has increased dramatically.
The primary directive for engaging in outsourcing is the cost savings it provides. Outsourcing is the latest tool that business leaders can call upon to achieve their strategic goals. Outsourcing saves money by allowing a company to focus its limited resources on its core competency. This makes outsourcing especially attractive for small and medium sized businesses that don’t have the support and expertise in multiple sectors like large multinational corporations. By outsourcing non-core functions, businesses maintain their competitive advantage in their core competency and reduce the opportunity costs associated with diverting resources into non-critical business functions. This article will focus on the benefits organisations get from outsourcing and how it gives them a competitive edge.