Tuesday, February 21, 2012

How outsourcing assists organizations leverage their resources better

In the last blog we looked at the access to resource that outsourcing enables. In today's blog we look at how organizations are able to better leverage their existing resources and there by create an advantage for themselves.

To understand what resource leverage means, let’s begin with a small example - having almost every established company today has an HR department within itself - catering to the various human resource related issues. Some leading organizations today have looked at their human resource department more from a value adding angle and have decided to outsource of the non-value adding aspects. Pay roll processing for example is an activity of the HR department, however this is one aspect that is extremely standardized but still consumes a lot of time. These sorts of activities are now being outsourced to other companies offering these sorts of services; this doesn’t just add in the lower cost factor but frees the HR department of these large organizations towards addressing the more challenging tasks that are more organization specific say - cultural transformation or building the leadership pipeline etc. 

In the above discussion we saw that in addition to cost minimization, the companies have now begun looking at the task that could be outsourced as a value-maximization perspective. By outsourcing the "non-critical" functions that the organization performs, the organization sharpens it focus, channelizes the resources it has towards achieving excellence in the "crucial" functions. 

This ability of organizations to leverage their resources also provides a long term benefit of channelizing the research in the crucial aspects of business and gain a competitive advantage of the future.

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