Outsourcing isn’t what it used to be. When executives began outsourcing substantial portions of their operations more than a decade ago, they did it to offload activities they declared to be noncore in order to cut costs and improve strategic focus. Today, however, companies are looking outside for help for more fundamental reasons — to facilitate rapid organizational change, to launch new strategies and to reshape company boundaries. In doing so, they are engaging in transformational outsourcing: partnering with another company to achieve a rapid, substantial and sustainable improvement in enterprise-level performance.
This concept has gained some currency recently in the technology press.1 The media have reported, for example, about the many outsourcing vendors that are touting their work as transformational — even though in most cases it is not. Unfortunately, media hype just confuses executives about what the term means and how the approach works. Another red herring is the emphasis on technology as a means of achieving transformation through outsourcing; many technology manufacturers and consulting firms have made grand claims on technology’s behalf. But while new technologies are often needed, the defining factor in transformational outsourcing is executives’ commitment to use the approach to change their organizations.
Transformational outsourcing is an emerging practice, but the track record of companies that have engaged in it is impressive. In a study of 20... To read the complete article, login or sign-up using the form below.
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