Aims

We can identify four reasons an organisation may have to use outsourcing:

• Reduction of costs
• Freeing in-house resources, which allows their more effective usage
• Gives access to specialised external resources not available in-house
• Solves organizational problems

According to research conducted in the US in the 90s by the Outsourcing Institute there are 10 aims companies want to achieve through outsourcing:

• Control and reduction of operational costs
• Increase focus on the primary activity
• Access to first-rate production capabilities
• Freeing of own resources to perform other functions
• Access to resources not available in-house
• Reducing the time lag before seeing the benefits of restructuring
• Dealing with a difficult or uncontrollable function
• Hedging risks
• Increasing capital
• Cash inflow

Source: Survey of Current Potential Outsourcing End-Users, the Outsourcing Institute Membership, 1998.

Outsourcing often goes hand in hand with the process of restructuring a company. The interaction goes both ways. On one hand outsourcing can be a part of the new structure and a way the company operates in a new setup. On the other hand introduction of outsourcing may initiate restructuring processes.