Cost: Not the Driving Force in Outsourcing
Filed in archive Best Practice on October 25, 2006
Before, outsourcing deals were only done because of only one reason: cost-cutting. Apparently, such reason does not bring out the most in outsourcing deals which resulted in many failed outsourcing transactions.
Maybe companies and outsourcing vendors alike have learned their lesson because most companies are now outsourcing not only for that Sole reason. Results by a recent research report done by Gartner revealed that companies with only cost-cutting in mind are more likely to have unsuccessful outsourcing transactions.
This does not mean that cost should not be regarded as a reason for outsourcing. As long as companies would not concentrate solely on money matters, their outsourcing deal would be profitable. Other reasons identified towards outsourcing are:
-efficiency
-quality
-availability of manpower
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Apart from cost cutting factor outsourcing enables you to shift your focus from peripheral activities towards your core business i.e the work that serves the customer and helps managers set their prioroties more clearly.