The endless debate of outsourcing versus insourcing is really meaningless. There are no absolute rights or wrongs in this regard, and the right position is somewhere in between.
Outsourcing is not a business goal in itself; it is rather a tool to meet the objectives. It is the overall business strategy that drives the sourcing decision.
Various firms have different business strategies, and therefore, diverse sourcing strategies. HSBC, for instance, follows the business strategy of acquiring other companies and integrating their customer base, which requires integration of IT systems, whether those are in-house or outsourced. GE, on the other hand, has the strategy of buying and selling businesses, making integration unnecessary.
Like HSBC and GE, two businesses can have divergent views on integration and other issues, driving their sourcing strategy. However, no business strategy is indelible. Circumstances do change, and it can be swift, forcing a business to reconsider their strategy. At a time when new competitors arrive in the market every week hoping to transform it, no strategy can be unflinching.
Kodak used to be a leader in the photographic film business; however, the company that overtook them was Nokia, a cellphone manufacturer, that had basically nothing to do in photographic film business. Advent of mobile phones that could take digital photos spelled the end of the heydays of Kodak. Fortunes of Nokia itself plummeted when other companies surfaced and its phone manufacturing business was taken over by Microsoft.
Enterprises must be quick in identifying the challenges and coming up with an appropriate response to safeguard their interests. Right balance of insourcing and outsourcing helps them to tackle challenges effectively.
Outsourcing enables businesses to be flexible enough to adapt to changing market contours and make radical changes at quick pace. Thanks to outsourcing, businesses can do away with time-consuming scaling up of internal operations along with the associated upfront costs.
The process of outsourcing has an inherent elasticity to give an opportunity to regional players play on a global scale. When outsourcing business processes, you also get to interact with professionals located elsewhere, which helps in getting new perspectives. If you have had no experience in outsourcing yet, it is time to consider how you can use outsourcing option to reorganize your business operations.
Accelerating globalization has made outsourcing a compelling part of your business strategy, enabling enterprises to appreciate the risks as well as the opportunities. To draw out the maximum advantage from outsourcing, you need to figure out what should be outsourced and what not. You need to know where the value is added in business processes. Examine the end-to-end flow of information, segregating the stages as critical, not-so-critical and unnecessary.
Not all processes are suitable for sending out and the best way to go ahead is to work with the service providers to determine how it can be worked out for optimum benefits, skill-wise and monetary. Reorganization of tasks can cut costs and enhance efficiency.
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