Monday, June 20, 2005

Intelligent Solutions: Why outsourcing makes business sense

Convergence of technologies such as telecommunication, information technology and media has redrawn the landscape of business, where geographical boundaries get blurred and electronic commerce and enterprise systems completely rule the roost. Such a scenario has propelled the demand for off- the –shelf software products and qualified software professionals to handle these functions. Consequently, demand has exceeded supply, and dearth of professionals has increased hiring costs, longer product development cycle and longer time to market.

Most likely, you won’t find required software products and qualified professionals in-house even within your geographical boundary. Outsourcing could be an apt alternative to solve many of your business problems.
Unavoidable reasons why outsourcing makes business sense

There are certain unavoidable reasons that make you realize that you will gain eventually if you use outsourcing as an intrinsic part of your business strategy. You can avail following advantages, if you opt for outsourcing:

Lessen overheads, free up resources
Minimize capital expenditure
Enhance efficiency
Free from non-core functions
Access to pool of specialized skills
Save on manpower and training costs
Trim down operating costs
Speed up development cycle
Build long-term, strategic relationships with world-class service providers
Boost tactical and strategic advantages
Focus on strategic thinking, process reengineering and managing trading partner relationships
Share your risks
Offer the best quality services, products and people
Be reliable and innovative
Provide value-added services
Perk up customer satisfaction
Harness the provider's extensive investments in technology, methodologies and people
Exploit the provider's expertise in solving problems with similar requirements.
Focus sparse resources on time-critical projects
Acquire required project management and implementation consulting expertise, along with access to best practices and proven methodologies
Minimize the risk of technological obsolescence
Extend the reach to more trading partners quickly and efficiently
Ease the overall IT management risk while retaining control of strategic decision making.

Outsourcing is, now, an established management tool for redefining and rejuvenating the business that induces today’s executives to reorient their traditional firm towards a more flexible structure crystallizing around core competencies and building long term strategic outside relationship.

1 comment:

Bhupesh said...

I think all this can be summed up as a combination of two simple reasons :
1) The famous "Core Competency Theory " by C.K.Prahalad according to which any business should take Outsource or divest noncore capabilities to free up resources that can be used to deepen core capabilities because it enables a company to deliver unique value to customers . It’s hard for competitors to copy or procure. There are numerous examples for eg. HLL doesnt doesn do any manufacturing of any product like Rin , fair and lovely , its shampoos because it is not good at manufacturing but yes once it receives these products it does the marketing very well which is its core competency . Same is the case with Nike which gets its shoes manufactured by asians and only adds value in terms of BRANDING because its core competency is that.

2)Of course the second reason is the reduced cost of operations because it may not be possible for an organisation to make many capital investments for eg. all organisations wouldn own a fleet of buses for commuting of their employees .