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Deciding whether to outsource.

Article Excerpt
[check] This checklist is for those who must address the decision of whether to outsource or not, and if so, what and how to outsource. Encompassed are the stages in the outsourcing process leading up to drawing up and testing a contract.

Often seen as a threat by employees and an opportunity by organisations, outsourcing is now standard practice in many organisations. In addition to the driver of cost-savings, there are many other elements that lead to a consideration of outsourcing, in particular the need for flexibility as demand for products or services rises and falls, and ways of delivering them improve.

On the surface the benefits of outsourcing seem not only straightforward but also considerable. Experience shows, however, that there are many pitfalls, dangers and costs.

Definition

Increasingly, outsourcing is understood to mean the retention of responsibility for services by the organisation but devolution of the day-to-day delivery of those services to an external organisation, usually under a contract with agreed performance standards, costs and conditions.

In this checklist the organisation considering outsourcing some or part of its functions will be called the Organisation; the external organisation to take them on will be called the Agency.

Advantages of outsourcing

The decision to outsource takes place for reasons of:

* cost and efficiency savings including staffing flexibility

* greater financial flexibility through reduced overheads

* operational flexibility and control through contractual relationships

* a wish or a need to focus on core activities

* access to...

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