Outsourcing as a strategy

Outsourcing was originally considered as sub-contracting the activities that were done (or could be done) "in house", for various reasons. The synthesis of growing competition, continuously changing business and purchasing strategies, growing demand for operation optimization and diminishing international trade borders, lead to the second phase of this process. There is a growing shift to local and global (known as "Offshore") outsourcing, backed by multinational groups and buy-back regulations, and thus outsourcing is not merely means for reducing costs, but an ongoing process in the organization's operationability. The competitive and challenging business constellation push yet further. The need to improve total competence and to lower risks results in instrumental focusing on the organization's qualities and competencies, and outsourcing as much as possible of other activities. This leads to a growing dependency on qualified and professional contractors, resulting in raising uncertainties and, consequently, emphasizing the need for risk management and control, while strengthening the multi - discipline management abilities. As such, the source of the competitive advantage lays more on the accumulated core competencies formed by all joint partners than on discrete capabilities of each organization by itself. It can be claimed that outsourcing is changing the world of business and the business of management. Thus, outsourcing is a strategic management issue. Under this assumption the business should allocate the best people available to run this unique operation. Building a business to success and last under this perspective is depenedent upon the sound base of appropriate strategy, focused approach and able management of outsourcing. In my article I wish to discuss this approach in view of the strategic decision scope, long range aspects and leverage optimization, pinpointing the key factors and practical considerations.