STRATEGIC OUTSOURCING

strategic outsourcing is a process involving outsourced service provider to manage all the tasks are important and otherwise will be manage by the organization. this is often done to allow a business to arrange the use of its assets to best advantage, and allow the company to move closer to the achievement of its goals. Outsourcing refers to the complete of a business process that has been traditionally operated and managed internally to an independently owned external service provider. A complete transfer means that the people, facilities, equipment, technology, and other assets are no longer maintained internally once the business process is outsourced. Outsourcing can be conceptualized as a process rather than simply an event.

Some of the generic strategic benefits outsourcing is cost minimization by reducing direct operating cost, eliminate overhead costs, and transforming fixed costs into variable costs. The second is by focusing what the organization does best or transforming the business to focus on new product and service we can refocus the organization to its core competencies. The third is improvement in operating performance is accomplished by increasing quality, increasing productivity, and obtaining new capabilities technologies from external sources. The last one is we can increased market share and revenue by assessing the providers network and accelerating expansion into new market. Specific purposes and benefits of outsourcing is to reduce and control operating cost. Besides that, purposes of outsourcing also to improve the quality of the products, to change company focus, to acquire external capabilities, to reduce risk, to turn fixed costs into variable costs and etc. While a contract is required to legally protect one’s interests, an extensive strategic assessment and a true commitment to a cooperative relationship with the service provider are both necessary to realize expected outsourcing benefits.

 An outsourcing strategy of this type may be employed by businesses and other organizations of any size, and normally helps to reduce the cost of operations as well as allow available resources to be allocated to the other necessary functions that are still managed within the organization proper. Many people tend to associate outsourcing with small companies that operate with limited budgets. This is often true, since a smaller business enterprise is likely to have limited resources. When this is the case, a strategic outsourcing effort may involve contracting with a provider to manage the process of generating invoices to customers, receiving those payments, and paying any outstanding debts using the proceeds from those payments.