If you do it right and can work very well, but if you do it wrong it can really bite you. However, I also believe that if it isn’t done right it can have the opposite effect with poor systems, higher costs and management time absorbed in fixing the problems rather than taking the business forward. I believe outsourcing is fundamentally good for businesses in that it gives them access to specialist expertise and systems, gives them benefits of scale that they could not realise on their own and allows them to concentrate on their core competencies. The answer, as is nearly always the case, lies somewhere between the two views. It has also had some major disasters with new IT systems that never go live and performance so poor the client has had to step in and take over to save the day. Outsourcing has improved services in a number of areas and has achieved huge cost savings in both the public and private sectors. Both views have their merits and both views have plenty of examples to back them up. Some see it as progress, improving services and saving money, whereas as some see it as job cutting, offshoring and poor results. But outsourcing is an emotive subjectĭespite the history, and how widespread it is, outsourcing is still an emotive subject that divides opinion. In the present day, many car manufacturers outsource design and marketing and sell through franchised outlets. By the 1960’s Ford was reliant on other businesses for raw materials and most of the component manufacturing. Motivated by a shortage of raw materials Henry Ford bought steelworks, glassworks, timber land and iron and coal mines. In the 1920’s Ford owned the supply chain. Outsourcing isn’t new and every business, to a degree, does it. Before I do that, I’d like to address the marmite-like image outsourcing has in business today. In future blogs I’ll cover off other areas like human, finance and strategic outsourcing, but technology is a good place to start. In this first blog of three, I look at why companies outsource technology. What are the pros and cons of outsourcing? What to look out for?
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