IT Governance

Should You Outsource the Things That You’re Doing Badly?

In the real world, when you are not good at something, you hand it off to someone else. If your car engine explodes, you just go to a mechanic, for instance. But in business, expectations are different. Businesses do not want to outsource something that they are doing badly, much like it would be bad to toss an angry viper at a zookeeper. Should this always be the case though? Matthew Burrows argues against it in a post for

The Versatility of Outsourcing

Business apprehensions stem from a place of responsibility. They believe that they should fully understand a service before they enlist the help of outsourcers in receiving it, because they do not want to get into a situation where unclear requirements and expectations create a messy outsourcing relationship from the very beginning. And this is a very valid concern. But the alternative is to hire consultants or contractors to repair the service first, and Burrows does not love this idea either.

His reasoning is that service providers may not deliver service precisely in the manner that your business would like, and the provider may have to work with you to transform service delivery on both ends to decrease risk. This scenario might occur whether or not you hired a consultant to “fix” that process beforehand, and most of the work done during the “fix” would now become irrelevant.

Burrows says you should just consider outsourcing as is instead:

One of the common mistakes in outsourcing is that customers try to specify exactly how to provide the service (often to make the procurement process easier), destroying some of the potential economies of scale available from the supplier being able to deliver it in a standardized way (which is key to them being able to deliver it cheaper) and leaving virtually no room for any innovation.

If we’ve forced them down to a very low margin, they’re likely to be under internal pressure to realize that profit in other ways. Supplier relationships always work best if they’re equitable – we have to recognize that the service provider needs to make money, and we also want them to be incentivized to continue increasing their value, introducing new innovation and improvement ideas.

For additional thoughts, you can view the original post here:

Related Articles

Back to top button

We use cookies on our website

We use cookies to give you the best user experience. Please confirm, if you accept our tracking cookies. You can also decline the tracking, so you can continue to visit our website without any data sent to third party services.