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Outsourcing
Economic Value Added
Strategic Planning
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Outsourcing
Outsourcing Book
Greaver, Maurice, Strategic Outsourcing, (NY,
NY: Amacom, 1999)
Outsourcing Articles
Davis, Charles E., Elizabeth B. Davis, and Lee Ann Moore, "Outsourcing the
Procurement-Through-Payables Process", Management Accounting, July 1998, p.
45.
Drtina, Ralph, , "The Outsourcing Decision", Management
Accounting, March 1994, p. 56.
Isaacs, Nora, "Call in the outsourcers", INFOWORLD, May 17, 1999
Renner, Cleia J. and Darin Tebbe, "Who Is Outsourcing and Why?", Management
Accounting, July 1998, p. 45.
Switser, Jim, "Trends in Human Resources Outsourcing", Management
Accounting, November 1997, p. 22.
Verschoor, Curtis C. "Evaluating Outsourcing of Internal Auditing", Management
Accounting, February 1992, p. 27.
Outsourcing Training
Outsourcing seminars customized for your organization in 1 and 2 day
formats. Call Value Creation Group at 972.980.7407 or email us at
john.antos@activitybasedmgmt.com
Reasons for Outsourcing
Per Outsourcing
Institute
Improve company focus
Gain access to world-class capabilities
Accelerate re-engineering benefits
Share risks
Free resources for other purposes
Make capital funds available
Reduce and control operating costs
Take advantage of resources not available internally
Handle a function that is difficult to manage or out of control
Outsourcing Considerations
Outsourcing is not just a quick fix, but should be an integral part of a
long-term strategy. An organizations should analyze its core competencies and consider
outsourcing everything else. With talent tough to come by, outsourcing may be the only way
to obtain talented, limited resources. When people are overworked and overqualified,
outsourcing may be a great way to retain employees by not requiring them to perform work
for which they are overqualified. Outsourcing could be used to increase morale and thus
productivity.
Outsourcing may make sense when customer requirements exceed the providers ability to meet
and exceed those requirements. It could reduce the hassle of providing a non-core service.
Or when an organization wants to minimize risk while still achieving its growth goals.
Outsourcing may make sense as protection against natural disasters.
Before outsourcing the total cost of a service must be determined. This
means all functions that are involved with performing activities that relate to a
particular service. These activities include upfront purchasing , maintenance and
operating, disaster recovery, research of new technologies, as well as disposal
activities. According to the Executive Director of the outsourcing Institute, "it is
not uncommon for a company to estimate the total cost of a function...for $10 million a
year." only to have the outsourcer come back and say"you are doing it for $14
million.
Fixed price deals do not make sense. If certain events occur, (e.g. change
in technology) the deal might be renegotiated. It is best to track performance monthly, as
least in the beginning. The deal should consider hidden costs like long-distance calls,
meetings with senior management, space issues, performance during the transition,
monitoring the contract, synchronizing applications, and fees.
Outsourcing Contract
Outsourcing Institute says watch closely:
agreement terms
minimum service levels
Data ownership and confidentiality
Warranty and increase of requirements
Exhibits
Incentives as guaranteed savings, shared benefits and risks, teaming, cross-marketing
opportunities
Disclaimers
Bankruptcy
Acts of God
Performance measures
Anticipate change
Click to find out how
we can help you achieve your goals through Outsourcing
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