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| There are many reasons why organizations choose to outsource functions and services. This section presents some of the main triggers and objectives behing decisions to engage external suppliers. |
Answer Key Questions
The outsourcing issue should be part of a larger one regarding how the function or functions being evaluated for outsourcing fit into the organization. As part of the outsourcing evaluation, questions like the following should be answered:
- What are our core competencies?
- Which services or corporate support functions are not integral to or close to our core competencies?
- What are the barriers raised by the corporate culture?
- What is the cross-functional impact?
- Can we fix ourselves internally before we consider outsourcing?
- What might be better accomplished by an outside vendor?
- What are the goals we want to achieve from outsourcing?
- What kind of relationship with a vendor is most appropriate?
- How do we deal with the people issues?
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Consolidated Building Maintenance Inc. Has Been In The Business For Over 38 Years, Rendering Outsourced Services Since February 2, 1967. It Has A Manpower Consisting Over A Thousand Personnel |
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All our documentation procedures comply with the lawful requirements. We take the headache off our clients by handling the details of business and government compliance. We utilize the most sophisticated customized computer program to process our entire operations in the most efficient way |
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| Hand in hand with our operations personnel, we seek to satisfy our customers. We are prepared to meet with our clients to address the project concerns. We make sure that the terms of our contract are served in the best way possible. |
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 Effectively Managing The Outsourcing Relationship |
Outsourcing is growing at a rapid rate in the United States, Europe and Asia because organizations view outsourcing as a way to achieve strategic goals, reduce costs, improve customer satisfaction and provide other efficiency and effectiveness improvements. Like any organizational decision, outsourcing requires effective management from the outset of the outsourcing evaluation through the life of the contractual relationship. This article outlines fifteen critical factors for successful outsourcing management. 1. Define the Objectives you Want to Achieve
Outsourcing must be done carefully, systematically, and with explicit goals. Companies that rush into outsourcing without fully understanding what they hope to gain may find themselves mired in a contractual battle with a chosen vendor or the recipient of services that worsen rather than improve. Sensible reasons to consider outsourcing include both strategic and tactical concerns on both a department and organizational level. Outsourcing might be justifiable for a department with high costs that cannot be reduced or a lack of competency in specific areas. Organizational needs that generate consideration of outsourcing include the ability to compete globally with global services or relief from financial pressures achieved through immediate cost saving |
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| BENEFITS |
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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: |
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- 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
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