|
 |
|
David ( USA ) |
|
|
"Great
to work with. Data was
accurate and came across
fast. Well done by this
provider, will use again
and recommend them
thanks!!. "
David, USA
|
|
|
|
|
|
|
|
Chris ( USA ) |
|
|
|
"Done an excellent job. We
have reached a snag in
this project and I thought
it would canceled. Beep
Tech solved the problem
very quickly and that
everything was perfect for
the project to continue. I
would not hesitate to use
this team for future
projects" |
|
|
|
|
|
|
| |
|
A computer chip maker hires a
staffing company to monitor
and manage all of their
non-exempt hiring
A university hires an
information technology company
to manage all of it's desktop
PC's and staff the user help
desk
|
|
Those who provide
outsourcing are often
referred to as
outsourcing partners,
suppliers and
providers. Those who
are purchasing the
outsourcing services
are called buyers or
users. Outsourcing
takes place when an
organization transfers
the ownership of a
business process to a
supplier. The key to
this definition is the
aspect of transfer of
control. This
definition
differentiates
outsourcing from
business relationships
in which the buyer
retains control of the
process or, in other
words, tells the
supplier how to do the
work. It is the
transfer of ownership
that defines
outsourcing and often
makes it such a
challenging, painful
process. In
outsourcing, the buyer
does not instruct the
supplier how to
perform its task but,
instead, focuses on
communicating what
results it wants to
buy; it leaves the
process of
accomplishing those
results to the
supplier
What define
outsourcing are more
the circumstances of
the relationship than
the nature of the work
performed—that is why
the label
`outsourcing' is
applied to a lot of
situations.
Outsourcing vs.
Suppliers
Replacing or
substituting the
services of an
external provider for
internal capabilities
characterizes
outsourcing
relationships.
Importantly,
outsourcing applies to
an activity an
organization did do or
would have done itself
Funded. A bank doesn't
say that it's
"outsourcing" the
production of mops,
brooms and chemical
cleaners when it buys
cleaning materials for
its janitorial staff
from a supply service.
That same bank may
`outsource' cleaning
services, or even
outsource purchasing,
but the difference is
that cleaning and
purchasing are things
a bank would
reasonable do,
manufacturing and
transporting mops,
brooms, and chemical
cleaners are not.
Outsourcing is not
about "supplying"
commodities or totally
unrelated products or
services.
Outsourcing vs.
Consulting
The difference here is
both difficult and
easy to see. The
difficult part is that
many firms
simultaneously
position themselves as
offering consulting
and outsourcing
services, they don't
clearly distinguish
the two, and in the
process they confuse
the situation. It's
easier when you think
clearly about what the
differences truly are.
Consultants advise us
on how to do
something. Outsourcing
providers actually do
it. Sometimes a
consultant will
deliver a business
service or product,
and that's when they
are acting like a
provider, and other
times an outsourcing
provider will advise,
but generally the
distinction is easy to
see. Most professional
services firms fall
into one of three
categories. There are
the consultants. There
are the providers.
There are the hybrids.
The reality is that
many firms are both
consultants and
providers, but play
different roles with
different clients and
at different times.
Outsourcing vs.
Jobbing and
Out-Tasking
Outsourcing
relationships are high
value-add, durable and
on going—they are not
a one-time only deal.
Hiring a provider to
set up your
technology, or a
manufacturer to handle
production when demand
exceeds capacity, or
using FEDEX to deliver
overnight packages is
not outsourcing.
Outsourcing
relationships are high
level, contractual
relationships for a
fixed period of time,
usually measured in
years, but they are
assumed to be
continuous. Provider
and user often work to
define the service
delivered. There is
frequent interaction
between user and
provider and a lot of
communication. The
outsourcing service is
customized to the
needs of the user.
All of the elements of
outsourcing combined
are what make it a
unique management
practice. Outsourcing
providers are
partners, given
significant managerial
discretion for how to
deliver the service,
who manage the
day-to-day delivery of
that service. The
value they create is
based on being a
long-term partner who
understands the
business, can deliver
on the requirements of
the relationships, and
look ahead to how they
can better service
client firms.
In the last ten years
there has been
explosive growth in
the use of
outsourcing. There are
three distinct stages
in outsourcing's
evolution tied to
executives' mind-sets
rather than to a
calendar.
As managerial
understanding of
outsourcing's values
proposition advances
then the number of
applications for
outsourcing multiply.
As they multiply, the
applications mature
from tactical and
short-term to
strategic and
long-term, and
eventually
transformational and
evolutionary.
Since 1990 there has
been an explosive
growth in the use of
outsourcing. From near
zero when outsourcing
first emerged in the
late 1980's to $100
Billion in 1996
(according to Harvard
Business Review) to an
estimated $318 Billion
by 2001.
Along the way
outsourcing has
matured into an
indispensable
management tool. As
famed management
writer Peter Drucker
notes, of all the
powerful management
tools to emerge in the
last half of the 20th
century outsourcing
uniquely compels
managers to ask "what
to do," increasingly
the central management
challenge.
Drucker's thoughts
appeared in a 1994
Harvard Business
Review article. In the
preceding years
outsourcing's value
and role were seen as
tactical and
immediate. The U.S.
business environment
of the late 1980's and
early 1990's was in
transition, and many
organizations needed
serious change. There
was economic
uncertainty and
pressure. Corporate
America was emerging
from a period of
significant corporate
restructuring and
large-scale
downsizing. Japanese
management theories
were influencing
American business and
a quality revolution
was underway.
Outsourcing the term
and the concept
emerged from its
application in three
places. For
manufacturing many
firms used foreign
labor to make
components and
products. Outsourcing
was also first used to
describe relationships
between firms and
their providers of
support services like
payroll, security,
grounds keeping,
maintenance,
janitorial, and food
services. Companies
like ADP, Aramark, and
ServiceMaster took on
these services. Often
outsourcing was used
to describe
longstanding
relationships. At the
same time large firms,
especially Fortune 500
Firms like Kodak, were
working with
traditional hardware
and software providers
such as EDS, IBM,
AT&T, CSC, and others
to provide a full
array of technology
services. It was
through these
relationships that
outsourcing as a
managerial practice
grew and flourished.
Tactical Outsourcing
In the first stage,
tactical
relationships, the
reasons for
outsourcing were
usually tied to
specific problems the
firm was having. Often
the firm was "in
trouble" to begin with
and outsourcing was a
direct way to address
the lack of financial
resources to make
capital investments,
inadequate internal
managerial competence,
an absence of talent,
and a desire to reduce
headcount. Outsourcing
often accompanied
large-scale corporate
restructuring. Many
tactical relationships
were forged to create
immediate cost
savings, eliminate the
need for future
investments, to
realize a cash
infusion from the sale
of assets and to
relieve the burden of
staffing.
The focus of tactical
outsourcing is the
contract, constructing
the right contract,
and holding the vendor
to the contract. The
expertise for
constructing these
arrangements emerged
from purchasing.
Frequently the
contract was simply a
fee for services. Much
of the value stemmed
from the discipline of
spending dollars
externally. When
managers created
successful tactical
relationships the
value of using outside
providers was clear:
better service for
less investment of
capital and management
time.
Strategic Outsourcing
As some pushed for
more value from
outsourcing
relationships the
goals of these
relationships changed.
Executives realized
that instead of losing
control over the
outsourced function
they gained wider
control over all of
the functions in their
area of
responsibility, and
they were better able
to direct their
attention to the more
strategic aspects of
their jobs. Instead of
facilities managers
worrying about
staffing janitorial
positions, they were
more focused on
infrastructure issues.
Technology executives
handed the running of
the data center to a
service provider and
turned their attention
to serving the needs
of internal customers.
The logic remains
compelling.
How outsourcing was
used and where it was
applied changed. The
size of outsourcing
relationships jumped
and the scope of the
service provider's
involvement grew.
Outsourcing changed
from being a tactical
tool to becoming a
strategic tool by
virtue of the dollar
value of the
relationships, the
integrated scope of
services, and the
length of the new
relationships. Most
importantly, the
managerial mindset
about the nature of
the relationships
matured from one
between buyer and
supplier to one
between business
partners. Strategic
outsourcing
relationships are
about building
long-term value.
Professors Quinn and
Hilmar coined the
phrase strategic
outsourcing in 1994.
But forward thinking
executives, like
Katherine Hudson of
Eastman Kodak as early
as 1989, was
practicing it earlier.
In that year Eastman
Kodak and Katherine
Hudson signed a
landmark ten-year
outsourcing deal with
IBM for $250 Million.
This outsourcing was
not about fixing a
troubled function,
avoiding a problem, or
restructuring. The
Kodak-IBM deal was
about identifying the
core competencies of
the firm, partnering
with a provider to
deliver the non-core
activities, while
focusing the firm's
resources on the core
competencies of the
firm. For the IT
operations at Kodak it
was a matter of focus,
IT's role, and the
direction IT would
take for the next
decade. The decision
to outsource was very
much strategic, and
the role the provider
(IBM) took on was
critical. The
rationale for
outsourcing was
focusing on core
competencies, or as
Katherine Hudson said,
"our mission doesn't
say `be the world
leader in
computing'"*.
Instead of working
with a host of vendors
to get the job done,
in a more strategic
model corporations
work with a smaller
number of
best-in-class
integrated service
providers. The working
relationships with
providers evolve from
adversarial
vendor-supplier
relationships to
long-term partnerships
between equals where
the emphasis is on
mutual benefit.
Michael Corbett
defined strategic
outsourcing as, "the
redefinition of the
corporation around
it's core competencies
and strategic,
long-term,
results-oriented
relationships with
service providers." It
is fundamentally
redefining the
business and
separating the core
from non-core
activities and making
decisions about how to
get the work done.
Transformational
Outsourcing
Transformational
outsourcing is the
term used to describe
third generation
outsourcing. If the
first stage of
outsourcing was about
doing the work with
the existing rules,
then the second stage
is about using
outsourcing as the
corporation is
redefined. The third
stage is using
outsourcing to
redefine the business.
To survive today,
organizations must
transform themselves
and their markets in
an ever more daunting
challenge to redefine
the world before it
redefines them. And
outsourcing has, once
again, emerged as the
single most powerful
tool available to
executives seeking
this level of business
change. This new
transformational
outsourcing recognizes
that the real power of
outsourcing is in the
innovations that
outside specialists
bring to their
customers' businesses.
No longer are
outsourcing service
providers simply
viewed as tools for
getting more efficient
or better focused,
they are seen as
powerful forces for
change — allies in the
battle for market- and
mind-share.
Outsourcing can be
used to radically
change the definition
of the business—open
new markets, deliver
new customers, and
create new products.
Outsourcing is
leverage. Here
outsourcing is a
vehicle for changing
the firm's
relationships with
customers, employees,
and business partners
by working with best
in world partners.
It's enabling growth.
It's the way to grow
by alliance. When
managers realize that
outsourcing
relationships are a
way to invest in the
future of the firm
they are thinking
differently.
Transformation
outsourcing is not
about creating
dependence, it's about
actively creating
interdependencies that
serve the interests of
all parties. Mission
Foods uses Ryder
Logistics to deliver
it's products to new
markets in ways the
company could never
have done alone. Where
once firms kept
outsourcing in the
background, never
letting their
customers know part of
the work was delivered
by a third party, now
firms co-brand
products/services and
firms march out their
outsourcing providers
to instill confidence
in customers and
business partners. "No
longer are outsourcing
service providers
simply viewed as tools
for becoming more
efficient or better
focused, they are seen
as powerful forces for
change, allies in the
battle for market and
mind share," says
Michael Corbett.
Outsourcing
relationships have the
power to thoroughly
redefine how business
is done.
|
|
|
|
|
|
|
|
|
|
