Profits of outsourcing

Question

What are the profits of outsourcing?

Answer 1

Profits of Outsourcing:

Outsourcing parts of the value chain to narrow the boundaries of a firm’s business makes strategic intelligence whenever:

i. An activity can be performed more inexpensively by outside specialists.

ii. An activity can be performed improved by outside specialists.

iii. An activity is not crucial to the firm’s capability to get sustainable competitive benefit and will not hollow out its center competencies, technical know-how, or capabilities.

iv. It decreases the company’s risk exposure to varying technology and/or varying buyer preferences.

v. It streamlines company operations in ways that cut the time it takes to acquire newly developed products into the market-place, lower internal coordination costs, or enhance organizational flexibility.

vi. It permits a company to focus on leveraging and strengthening its center competencies.