Organizations that outsource are seeking to
realize benefits or address the following
issues:
Cost savings. The lowering of the
overall cost of the service to the
business.
Cost restructuring. Operating
leverage is a measure that compares
fixed costs to variable costs.
Outsourcing changes the balance of this
ratio by offering a move from variable
to fixed cost and also by making
variable costs more predictable.
Improve quality. Achieve a step
change in quality through contracting
out the service with a new service level
agreement.
Knowledge. Access to intellectual
property and wider experience and
knowledge.
Contract. Services will be
provided to a legally binding contract
with financial penalties and legal
redress. This is not the case with
internal services.
Operational expertise. Access to
operational best practice that would be
too difficult or time consuming to
develop in-house.
Staffing issues. Access to a
larger talent pool and a sustainable
source of skills.
Capacity management. An improved
method of capacity management of
services and technology where the risk
in providing the excess capacity is
borne by the supplier.
Catalyst for change. An
organization can use an outsourcing
agreement as a catalyst for major step
change that can not be achieved alone.
The outsourcer becomes a Change agent in
the process.
Reduce time to market. The
acceleration of the development or
production of a product through the
additional capability brought by the
supplier.
COM modification. The trend of
standardizing business processes, IT
Services and application services
enabling businesses to intelligently buy
at the right price. Allows a wide range
of businesses access to services
previously only available to large
corporations.
Risk management. An approach to
risk management for some types of risks
is to partner with an outsourcer who is
better able to provide the mitigation.
Time zone. A sequential task can
be done during normal day shift in
different time zones - to make it
seamlessly available 24x7. Same/similar
can be done on a longer term between
earth's hemispheres of summer/winter.
Customer Pressure. Customers may
see benefits in dealing with your
company, but are not happy with the
performance of certain elements of the
business, which they may not see a
solution to except through outsourcing.
Focus and core Competency.
Organization would be free to focus on
their core business achieving much
required competence, leaving non core
responsibilities to the outside party.