Outsourcing SWOT Analysis: U.S Industry
PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET
Outsourcing SWOT Analysis for Some US Industry
Md B. Sarderl K.J. Rogersi, Edmund Prater2 'Department of Industrial and Manufacturing Systems Engineering, University of Texas at Arlington, Texas - 76019, USA 2Department of Information Systems & Management Science, University of Texas at Arlington, Texas - 76019, USA Abstract--Outsourcing is proven as a good idea for many firms that need to reduce operating costs and improve information technology operations. But it remains important for them to select the appropriate outsourcing activities. Many companies will be hurt by hastily following the herd down the outsourcing path without thoroughly evaluating the benefits and risk associated with it. Some companies even do not ask themselves the fundamental question for outsourcing such as; will it add value to their customer? Or will it reduce their overall costs? If they can answer yes, it might be a candidate for outsourcing. In this research we tried to evaluate the outsourcing benefits and its underlying risks in the context of three US companies from three different businesses. A SWOT analysis was done to find the best candidate of outsourcing for a particular company.
outsourcing contracts [9]. One in four companies has brought outsourced functions back in-house and nearly half have failed to see the cost savings they anticipated from outsourcing, according to a study by Deloitte Consulting [4]. Instead of simplifying operations, many companies have found that outsourcing activities can introduce unexpected complexity, add cost and friction into the value chain, and require more senior management attention and deeper management skills than anticipated, according to the study [3]. Due to this negative experience, many US companies are taking a cautious approach now. In the following sections we have talked about different approaches of outsourcing and decision making process to select
Outsourcing SWOT Analysis for Some US Industry
Md B. Sarderl K.J. Rogersi, Edmund Prater2 'Department of Industrial and Manufacturing Systems Engineering, University of Texas at Arlington, Texas - 76019, USA 2Department of Information Systems & Management Science, University of Texas at Arlington, Texas - 76019, USA Abstract--Outsourcing is proven as a good idea for many firms that need to reduce operating costs and improve information technology operations. But it remains important for them to select the appropriate outsourcing activities. Many companies will be hurt by hastily following the herd down the outsourcing path without thoroughly evaluating the benefits and risk associated with it. Some companies even do not ask themselves the fundamental question for outsourcing such as; will it add value to their customer? Or will it reduce their overall costs? If they can answer yes, it might be a candidate for outsourcing. In this research we tried to evaluate the outsourcing benefits and its underlying risks in the context of three US companies from three different businesses. A SWOT analysis was done to find the best candidate of outsourcing for a particular company.
outsourcing contracts [9]. One in four companies has brought outsourced functions back in-house and nearly half have failed to see the cost savings they anticipated from outsourcing, according to a study by Deloitte Consulting [4]. Instead of simplifying operations, many companies have found that outsourcing activities can introduce unexpected complexity, add cost and friction into the value chain, and require more senior management attention and deeper management skills than anticipated, according to the study [3]. Due to this negative experience, many US companies are taking a cautious approach now. In the following sections we have talked about different approaches of outsourcing and decision making process to select
References: [1] Benedon, William. (2001), "Outsourcing: The Right Decision." The Information Management Journal, Jan.: 34-41. [2] Cross, John. (1995), "IT Outsourcing: British Petroleum 's Competitive Approach." Harvard Business Review, May/June. [3] Howells, Jeremy. (1999), "Research and Technology Outsourcing." Technology Analysis & Strategic Management, 1.1: 17-29. [4] Huiskonen, Janne, and PirttilaTimo. (2002), "Lateral coordination in a logistics outsourcing relationship." International journal of Production Economics, 78: 178-185. [5] Jennings, D. 1997. "Strategic Guidelines for Outsourcing Decisions." Strategic Change, 6: 85-96. [6] Lacity, Mary C., and Leslie P. Willcocks. (1998), "An Empirical Investigation of Information Technology Sourcing Practices: Lessons From Experience." MIS Quarterly, Sep. 1998: 363-408. [7] Roberts, Velma. (2001) "Managing Strategic Outsourcing in the Healthcare Industry", Journal of Healthcare Management, 46:4, July/Aug.: 239-249. [8] Sobol, Marion G., and Uday Apte. (1995) "Domestic and global outsourcing practices of America 's most effective IS users." Journal of Information Technology, 10: 269-280. [9] Verma, Pragati, (2005)"Outsourcing no more on US ' hot list", The Economic Times, April 25 [10] Zviran, Moshe, Niv Ahituv, and Aviad Armoni. (2001) "Building Outsourcing relationships across the global community: the UPS Motorola experience", Journal of Strategic Information System, 10: 313-331. There are a number of ways that companies choose to conduct outsourcing and there are a number of studies conducted to determine what is most effective. The only thing that can be concluded for sure is that there is no one solution to outsourcing. What we can conclude, however, is that every company can benefit from learning more about benchmarking outsourcing strategies and that they must be aware of not only the benefits, but also the risks. There is no one answer to choosing the correct outsourcing strategy accept that companies should consider it as a viable avenue for competitive advantage and should take ample time to determine their unique outsourcing strategy. Single source, multiple source, selective function, or entire business process outsourcing: Which one you use doesn 't really matter as long as you evaluate, benchmark, plan, and execute according to your business strategy. As with every business approach, outsourcing is just one of many success enablers that has both risks and rewards. It is up to the leadership of the company to fit it into the winning equation. 242