Outsourcing allows a company to focus on its core competencies more efficiently. The contracted third party company’s business model generally leverage focus and scale as they specialize in the outsourced activities. The outsourcing company can thus can benefit from relatively low cost and state of art activities without having to internalize them.
- Determine what activity correspond to core competencies and which might be outsourced
- Evaluate quantitatively the cost and benefit of outsourcing different activities
- Assess non-financial impact of outsourcing different activities, such as lost synergies, dependence on the contracted outsourcer
- Rank best opportunities
- Ensure client acceptance
- Develop a contract using performance guidelines and measures that fit client’s expectation