THINKING DIFFERENTLY - Ussco.com

DEALER ISSUESSEPT/OCT 2008The Ins And Outs ofOUTSOURCINGWhile outsourcing can provide alot of benefits, it can also presentsome complex challengesOutsourcing has become a hot topic over the last few years,especially with the export of customer service functionsfrom the U.S. to offshore locations. In a strict sense, however,outsourcing has been practiced throughout history. Frommercenaries hired by ancient kings to defend their territories topresent-day lawyers protecting the assets of a corporation, therehave always been guns for hire to those willing and able to paytheir price.Outsourcing is simply turning over a business function or activityto be executed by an outside resource. Advertising agencies, lawoffices, accounting firms and business consultancies are all outsourcingoperations that have been widely accepted for years. It isthe expansion of outsourcing to less traditional business functions,however, that has businesspeople considering which of their organizations’activities should be outsourced, if any, and what benefitscan they expect.WHY OUTSOURCE?From HR and IT to market research, accounts receivables, andlogistics — just about any business function can be outsourced.A lot of venerable consumer brands have even become nameplateoperations as a result of outsourcing design, manufacturing andjust about every other business activity to external partners.14OFFICELINE | www.ussco.comSo what are the benefits of outsourcing? A survey conducted bythe Outsourcing Institute revealed the number one reason was toreduce and control operating costs.This was followed by:• Improve company focus• Obtain world-class capabilities• Free up internal resources• Access resources not available internallyWhile the primary reasons for outsourcing may be diverse, a wellexecutedinitiative can help an organization achieve all of thoseobjectives.Consider the business that outsources its IT activities with the primarygoal of reducing and controlling operating costs. The businesswill not have an ongoing expense in hardware and software— and can actually raise capital by selling the computer resourcesit possesses. Nor does it have the hiring and payroll expense of ITpersonnel or the investment in continuing education in order tokeep current.Of course, there is a cost to outsourcing — often seemingly a verysteep one — which is always an important factor when evaluatingoutsourcing. Yet often, outside vendors can provide specializedservices far more economically than an organization can byutilizing internal resources. This is especially true when internal