Outsourcing Rationale
Why do organizations outsource? What benefits do they seek? What drives the initiative?
The answers to these questions are wide and varied. Some of the most common, however, are listed below:
Organizationally Driven
reasons
Enhance effectiveness by
focusing on what you do best
Increase flexibility to
meet changing business conditions, demand for products and services and
technologies
Transform the
organization
Increase product and
service value, customer satisfaction, and share-holder value
Improvement-driven
reasons
Improve operating
performance
Obtain expertise, skills,
and technologies that would not otherwise be available
Improve management and
control
Improve risk management
Acquire innovative ideas
Improve credibility and
image by associating with superior providers
Financially Driven
Reasons
Reduce investments in
assets and fee up these resources for other purposes
Generate cash by
transferring assets to the provider
Revenue-driven reasons
Gain market access and
business opportunities through the provider’s network
Accelerate expansion by
tapping into the provider’s developed capacity, processes, and systems
Expand sales and
production capacity during periods when such expansion could not be
financed
Cost-Driven reasons
Reduce costs through
superior provider performance and the provider’s lower cost structure
Turn fixed costs into
variable costs
Employee-driven reasons
Give employees a stronger
career path
Increase commitment and
energy in non core areas
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