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Benefits of outsourcing

Why do you think companies outsource? What benefits does outsourcing provide them?

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The initial driver for outsourcing was cost savings. Although still an important consideration, companies are becoming much more strategic about outsourcing, seeking benefits such as value creation, operational flexibility and competitive advantage when considering what services to outsource.

To achieve more strategic benefits, companies must take a different approach to outsourcing. First, they must determine whether it makes sense to outsource a process in the first place. This requires an understanding of the human and technical inputs required for delivering "just-right" service -- service that meets the organization's business requirements. They also need a management process for continuously evaluating service delivery and communicating feedback to promote service optimization. To accomplish this, companies need effective sourcing managers who can lead the process of evaluating and codifying service metrics.

This was first published in March 2006

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