Strategic Outsourcing: Changing the Game, Balancing the Competition

Strategic Outsourcing: Changing the Game, Balancing the Competition Banner

As the world endured economic downturns during the first decade of the 21st century, organizations began to entertain the prospects of strategic outsourcing, managed service, and shared services. Such business foresight came about in an effort to re-evaluate their existing models and structures and to ensure their survival in the rough and tumble of stiff competition. While outsourcing firms have been providing their services to various organizations since the latter part of the 20th century, they also had to make concessions since they had to deal with potential clients who do not have financial leeway and are desperately trying to cut costs to keep afloat in the surge of the so-called economic tsunamis.

The outsourcing industry somehow presented itself as a lifesaver for many companies hit by economic crises. This is mainly attributed to the capability of outsourcing companies to facilitate quick restructuring of the current business model, enabling it to adapt to a technologically-advanced and converged environment. If large-scale organizations were to travel back in time, most of them would take on a different business model. Adapting Darwin’s theory of natural evolution, it is postulated that changes in the business environment creates a domino effect, affecting demand, competition, and business practices. As expected, economic downturns contributed to the transformation of entire organizational structures and business models.

Recent economic issues that plagued western countries have literally choked the life out of numerous companies, forcing most to shut down. For companies which are barely managing to survive, outsourcing companies have become a safe haven even for skeptics. The popularity and success of the outsourcing industry in saving the business sector has caught the attention of the government sector, opening new opportunities for outsourcing companies to exploit. Caught in an era plagued with reduced funding and limited choices, the outsourcing industry was practically at the right place at the right time.

Despite the growing interest in outsourcing, some are still reluctant to take the path which saved innumerable companies from the financial devastation that left a lot of organizations in shambles. Majority of those who decided not to pursue the outsourcing option either cannot justify the costs involved in the transition, or simply avoided the responsibility of making a decision that could make or break the company. However, as the economy shifted to a recovery phase, a growing number of leaders have begun to seriously contemplate on what transpired during the economic disaster. Furthermore, these leaders have come to realize the long-term benefits that outsourcing has to offer.

There is a popular misconception that as more money is being saved by a company through outsourcing, the greater the possibility of the company outsourcing additional business processes. However, the outsourcing industry has proven time and again that this is not the case. The strategic outsourcing philosophy dictates that as organizations begin to realize the benefits of outsourcing, it also provides the company with a deeper understanding as to which business processes are appropriate for outsourcing and which ones need to stay in-house.

The experience gained by the outsourcing industry through the years has enabled it to offer its services to a wider audience. For example, small and medium-scale enterprises (SMEs) were able to turn the tables on large companies by utilizing strategic outsourcing as the game changer. Gone were the days when SMEs simply cannot compete with large multi-national corporations due to the large difference in resources and manpower. Partnerships between SMEs and outsourcing companies have completely rewritten how the game is played due to the improved business capability and reach enjoyed by SMEs. You need not be the biggest player in the field to score the goal if you can rewrite the rules and if you know when to field in your game changer – strategic outsourcing balances the scorecard in your favor.

June 21, 2012