Outsourcing as a Stratergy

Outsourcing as a strategy can help make a big difference to your business, delivering major changes and improved performance, through concentrating on your key core activities and working with specialist outsourcing providers

Outsourcing your non-core activities frees your finance and resources including your time, for investment in the areas that really need them. Outsourcing allows the business to concentrate on what it is good at, what is unique or special compared to its competitors (its core competencies and where it is different) in order to deliver better results.

Outsourcing can move a business away from the traditional self-sufficient structure, where all the functions of the business are retained within the business, towards a business structure where it’s able to make more focused investment in areas where it has unique competitive advantage (its core competencies). To achieve this, an organisation can create relationships with specialised providers of outsourcing services, for many of its critical activities that must be performed extremely well, but where the organisation gains little competitive advantage by doing the work itself, perhaps such as in HR, facilities management, purchasing, IT and finance and accounting.

However, a business doesn’t just need to look inside the organisation for competitive advantage, it can also look externally. Outsourcing opens up brand new sources of competitive advantage. By creating close relationships with your outsourcing partners, you can not only acquire competitive advantages directly from the partner, but also gain competitive advantage from the unique ways the organisation blends its inside and outside activities to create new ways to provide services to customers.

To make outsourcing as a strategy work:

1. The business must firstly, identify the markets or services it plans to offer;
2. Secondly, identify what you want the business to be good at, that is, where you want to be special or unique compared to your competitors (its core competencies and points of differentiation); and
3. Lastly, identify the sources of these skills to enable you to provide these core competencies to gain competitive advantage, from both the following sources:
   • Inside the organisation, and
   • Through working with external partners to the organisation

This makes outsourcing as a strategy a powerful tool for substantially improving the performance of your business.

If you have questions on the above or on any other planning and strategy articles, or want to know more about how strategic planning and outsourcing can help develop your business in a practical way, Sanders Geeson and MOST, its general business consultancy partner, would be delighted to help.