Thursday, March 09, 2006

Does all outsourcing necessarily benefit a company?

I have never been a great advocate of outsourcing( BPO to be more precise), not that I am againts free markets and liberalisations, but it have never appealed to me. I wouldn't mind managing a BPO unit though. It is highly lucrative. And there still are opportunities for canny enterpreneurs.

I found an article today, on the long term costs and short term benefits for most of the customer facing outsourcing contracts, which today makes up a bulk of the Outsourcing business. As it says, outsourcing (customer facing processes for this artcle) will never give you a sustainable competitive advantage because your competitor can also go and buy the same service from the open market to do the same thing (equally poorly). Read more

But hey! I am not at all talking about this..

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2 Comments:

Blogger Casablanca said...

Sorry I havent read the two links yet... but my take on Outsourcing is that sooner or later, the labour arbitrage is lost. So the only thing that allows a competitive edge is economy of scale...
Just my 2 cents worth.

9/3/06 5:42 PM  
Anonymous tony said...

Your 2 cents worth speaketh all... Depending too much on labor arbitrage is foolish if we don't use that to our good; we must follow the steps of S Korea

9/3/06 10:38 PM  

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