This need for a well defined matrix of critical, value-generating activities and processes and required Core-Competencies must lead to the top management asking the following important questions:
What specific activities/processes should be performed in-house and which activities/processes/functions should be outsourced?
Outsourcing is therefore a Strategic Concept as it helps a company to determine its 'Optimal Critical Internal Mass' in terms of financial, physical and human resources. Outsourcing is infact the strategic use of External Resources to perform certain predetermined non-critical, non-core activities which are nevertheless important for the functioning of the organization, and supported by long-term Alliances/Relationships. Hence, a well conceived Outsourcing Plan will facilitate to Liberate a company's management from the hassles and frustrations of such non-critical, non-core activities and allow it to concentrate on the all-important 'Core' areas of business.
As we have seen businesses today have to be managed to withstand intense competitive forces and sustained through very unpredictable and turbulent times. These altered dynamics of business have compelled business leaders and managers to explicitly determine and focus on:
- Their Core Competencies, and
- The Organisations Critical Value-Generating Processes.
The resolution of both these issues, taken together, will lead to answers to the following important questions:
- How would we define and ascertain the overall Organizational Demographics of our company and more specifically how would we achieve our Internal Human Resource Competencies required for the Organization and also stimulate and maintain the Demographic Vitality over time.
- What are the Critical Value Generating Processes for our Organization, and furthermore, in this context.
- What are the Activities, Function and/or Sub-systems across the organization which need to be Outsourced to External, Third Party Service Providers.
Well considered outsourcing decisions generally lead to a Redefinition of Processes and Functions i.e. a Redefinition of Organization Structure. In operational terms the Outsourcing Objective must be to achieve Speed & Flexibility to respond and adjust to rapidly changing circumstances through a Lean Organization Structure. Such Lean structures today allows organizations the freedom to function through effective teams with focus on Customer delight & satisfaction, thereby building customer and brand loyalty. Leading to topline growth and cost rationalization.
