Outsourcing is the latest buzzword these days. The potential for using outside supply has moved on from those activities that are normally regarded as of peripheral concern to a business, such as cleaning, catering, and security, to include critical areas of activity, such as design, software development, web development/hosting, application support or management, technical support/help desk etc
Outsourcing offers a powerful strategic tool that can help maintain an organization’s
focus. It is a tool whose use will be most effective when its strengths are exploited and its limits are understood. This process is best managed by the use of a team-oriented problem analysis that embeds the outsourcing decision into the deeper needs of the organization.
There are two questions that must be posed and satisfactorily answered before the outsourcing process can proceed.
1. Does the use of an outside source increase our access to the service we are currently performing internally?
It should be clearly understood that the service provided must be greater than or equal to the current operation.
Furthermore, the results of the transition must be seamless. Certain costs will be accrued within the initiation phase but these should be predictable and recoupable within the first months of the new relationship. This time frame must be defined, and the costs accepted by each
party. If the shared risk is an element of the partnership, this transition period is an excellent location for it.
2. Does the outsourcing organization offer the same quality of administrative support we currently have and the technical insight to meet future needs?
There is no reason to enter into an outsourcing relationship that will require regularly scheduled renegotiation based on changing needs. The decision to outsource should not be made unless a long-term relationship is the business goal.
Once an acceptable level of comfort is established with the answers to these questions, the tactical issues that comprise a solid decision may be addressed. While the primary rule of successful outsourcing is knowledge of what you are purchasing and why you are purchasing it,
the fundamental reason for outsourcing is improved efficiency.
Outsourcing is a valuable tool for improving efficiency, productivity, and profitability. It is a dynamic process that can provide mutual benefits in both short-term and long-term situations. Its use as a tool should be as carefully considered as it is carefully created. Done in that manner it offers a potential for success that is hard to resist.
Outsourcing needs to be viewed as a tool for improving one’s competitive future, not just as a last resort to save money and market share. In an economic environment where the cost of capital and the need to use capital wisely have become acute, outsourcing of functions within the process can make the outcomes of those decisions more clear.
