Going for a Strategic Outsourcing

On June 6, 2013, in Outsourcing, by Business Development Group

Strategic--as the ability to bring profound positive changes to business performance

Outsourcing has been around for quite a while already. Since its dawn many years ago, it has shown great development and progress that has given way to a lot of opportunities to people and even to other industries. Despite of outsourcing’s recorded rapid growth, tested aptitude in reaching business success, and even with its forecasted expansion in the coming years, many professionals are still on the pursuit of making it more strategized and progressive.

A latest post of The Sauce (a centralized newswire service for Business Process Outsourcing information in Asia Pacific) talked about Strategic Outsourcing. Bernard Sia, Head of Strategy of Mesiniaga Alliances Sdn. Bhd. (Alliances) who authored the post presented different perspectives on defining Strategic Outsourcing coming from different business heads he encountered in the past.

In his post, he mentioned that in 2012 he interviewed a group of C-Level leadership in Malaysia across several industries and got a resoundingly summarized meaning of “Strategic” as the ability to bring profound positive changes to business performance.

Sia related the gathered meaning to Holcomb and Hitt’s (2007) definition of Strategic Outsourcing though in the absence of the word “profound.” Saying as long as there are positive changes that are not cost related, then, it is strategic.

Outsourcing becomes strategic when firms rely on intermediate markets to provide specialized capabilities that supplement existing capabilities deployed along a firm’s value chain. Further, strategic outsourcing creates value within the firm’s supply chains beyond those achieved through cost economies.

Many people relate outsourcing with companies with limited resources for bigger operations. This is, however, often true. In this case strategic outsourcing effort may help to manage the process generation success. Normally, strategic outsourcing helps to decrease the cost of operations as well as allow available resources to be allocated to the other essential functions that are still managed within the organization proper.

The diagram below is the given example of Sia on how to achieve strategic outsourcing. The diagram specifically shows a summary of reciprocal actions that the IT outsourcing vendor can embark on to meet customer’s objectives.

 

Related Article:

Achieving Strategic OutsourcingStrategic OutsourcingStrategic Outsourcing to O2I

Photo Attribution:

By Levente Fulop from Brno, Czech Republic (The King’s Game) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

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