Nov

27

Why outsource?

There are reasons behind why companies decide to outsource to prized destinations like Cebu Philippines. There are factors that influence companies to consider outsourcing as a business strategy. Some organizations could be influenced more by some of these factors than others.

Focus on Core Competencies

Outsourcing is not only the transfer of work, but it can be also the transfer of decision rights. By doing this transfer, a company reduces its need  to focus high-level resources on the effort of decision making. A service provider takes on the responsibility for decision making and can be held accountable. Clients are now seeing service providers as business partners who can contribute to a company’s strategic efforts by providing expertise and competencies not found in-house.

When companies can focus on core competencies, it can also re-evaluate its organization structure, realign its urgent and central priorities. With focus, companies can better manage its activities.

 

Access to Resource and Knowledge

Today, companies can access external resources and knowledge and not own these resources. This saves on opportunity cost; when companies strive to do everything and spend resources to create expertise, skills and acquire technology, these companies misuse their resources. Outsource service provides can provide knowledge and resources at lower cost than it takes to own these same resources.

 

Cost Savings

The primary reason why companies outsource is to save costs in opportunities and operations. These savings are realized through many ways.

Cost savings can come from the service providers based in emerging and developing economies where wages and cost of labor are low. These emerging and developing economies also provide beneficial tax concessions and set-up benefits that encourage multinational and international corporations to open up facilities.

 

Outsourcing as a strategy should be capability- and competency-intensive. Organizations should focus to tap on specialized expertise, knowledge, processes and capabilities found outside the organization, and to use these to improve the effectiveness and efficiency of operations.

When done properly, outsourcing as a strategy can not only optimize operations but also contribute to the strategic and competitive advantages of the company’s products and services.

Outsourcing Solutions, Inc. – Outsourcing that Works!

 

Reference:
Power MJ, Desouzam KC, and Bonifazi, C. 
"The Outsourcing Handbook"
2006. Kogan Page Limited: London, UK.
Link Here.

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