The decision-making process for the outsourcing of services

Résumé du document

In modern times, outsourcing of services has become an entire dimension in business strategy. It has become international and global. While it is growing iextensively, the nature and the focus of outsourcing is slowly evolving. And as it often happens with new concepts, outsourcing tends to become the panacea of some companies that do not really know how to deal with services in their company. The purpose of this paper is to offer a fresh view of outsourcing, showing how it has to be well adapted in each company and develop a global model for the decision-making process for the outsourcing of services.

Extraits

[...] The technology clock speed is the evolution of technological changes. The higher the clock speed is, the better it is to insource. Competitive position means is the service you want to outsource a competitive advantage for the company? “Capable suppliers” asks the question of the dependence upon the suppliers. Even if the company decides to outsource, it always has to keep its independence. Finally the architecture of the company also has its importance in the decision of outsourcing. The decision will not be the same if the architecture is modular or integral. [...]

[...] While it is growing intensively, the nature and the focus of outsourcing is slowly evolving. And as it often happens with new concepts, outsourcing tends to become the panacea of some companies that do not really know how to deal with services in their company. The purpose of this paper is to offer a fresh view of outsourcing, showing how it has to be well adapted to each company and trying to develop a global model for the decision-making process for the outsourcing of services. [...]

[...] Of course one should not forget the other part of the process: the outsourcing company. For a successful decision, these companies must be able to answer all the needs of their clients. Call centers are able to do that because they are in place for many years now. The outsourcing of services is quite recent now, so I think that with the time, these companies will develop themselves and broaden their offer of services and be able to be closer to companies' needs. [...]

[...] The decision-making process seems to be the cornerstone of the outsourcing. The failures described in the example seem to have been easy to avoid if the decision had been taken more carefully. Each company has its own specificities, so the decision will not be always the same. A Gartner study released in 2003 stated that half of the year's outsourcing project would fail to deliver on bottom-line promises. We will now see in this second part if the different tools that have been developed can help avoiding these failures. [...]

[...] The second example that we can take is the US bank JP Morgan. In 2002, they decided to outsource their IT system to IBM. They had a seven years contract agreement, but after two years, they stopped the partnership. They gave several reasons: first they said that the service offered by IBM did not reach their expectations. But finally they said that after merging with another bank they realized that they actually had enough capacity to manage their IT in-house. [...]