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Is the Concept of Outsourcing still Effective?

by: Sarah Joson

Monday, November 19, 2012 | Outsourcing News |

The presidential elections in the US must have amplified the negative implication that the term outsourcing has.

An article in CIO.com proves that a lot of service providers want to break away from the negative idea and want to be known as something else, something better.

The article highlights a study done by Hfs Research, an outsourcing analyst firm, in which 63 percent of IT leaders said they would like to remove the term "outsourcing" when speaking of the IT services that they subcontract to third party providers, while 68 percent said they do not want to be associated with the term.

According to Cliff Justice, Partner in KPMG’s Shared Services and Outsourcing Advisory, outsourcing is beginning to evolve. In his report "The Death of Outsourcing", processes and delivery models are said to be shifting from basic cost-cutting processes to more complex operations that deal with the client’s higher expectations and provide tools that help businesses operate. He also mentioned in the study that customers and providers should come up with fresh ideas regarding outsourcing.

His report pointed out that entrepreneurs should look at which process would best suit their business. They should think of it as an "extended global enterprise" where they can make use of, and combine, insourcing, outsourcing, or offshore outsourcing.

Outsourcing as a commodity instead of a special service

In an interview, Cliff Justice revealed that the shift in the industry began around 2006-2007 and that outsourcing has evolved as a commodity instead of a special service. Businesses which are well aware of the outsourcing processes use it to enable their business to grow and mature, and are actually only purchasing the services that the business needs and help them achieve their targets. It has resulted to new products, collaboration, and innovation.

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