TACTICAL REASONS FOR OUTSOURCING There is a growing popularity of adopting a strategic approach to sourcing. This stems from the simple fact that organisations adopting this method, appear to do well. Strategic sourcing is only likely to be effective and bring the desired results, if management is prepared to adopt a completely new perspective on management control. Organisations are more likely to meet their commercial objectives and maximise their success if they direct management control not so much towards controlling inputs, but rather towards focusing on the finished output. Some of the strategic objectives for pursing outsourcing may be: Reduce and control operating costs. Reduce cycle times Improve customer service Leverage scarce resource Avoid extensive capital outlay

WHAT TO OUTSOURCE (Identifying Outsource Opportunities) Understanding the benefits that you seek to achieve from outsourcing (the why) provides the basis for evaluating which business process to consider for outsourcing (the what). Each business process within an organisation can be evaluated in terms of a set of three questions. A negative answer to any one of these three questions may provide the case for outsourcing: Does the performance of this activity represent a core competency of my firm? Does the performance of this activity support the strategic direction of my firm? Can my firm perform this process on a world-class basis? (i.e. can this process be performed at a lower cost, with better quality)? A negative answer to any one of these questions indicates a process that you should consider for outsourcing. Before making the decision to outsource, however, you must answer one more question: Do l understand the process well enough to outsource it? If not, then you will require outside assistance to leverage process for outsourcing.

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