A Change in the Services Outsourcing Market?
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Vendors and organizations have inherently conflicting objectives, putting the latterâ€™s
objective for innovation, cost savings, and quality at risk. Moreover, the vendorsâ€™ structural advantages do not always translate into cheaper, better, or faster services. The worldâ€™s largest companies should be able to replicate the vendorsâ€™ structural advantages in-house and rely on vendors only under specific circumstances, such as fixing deep-seated structural problems or maintaining infrastructure operations.
Outsourcing originated and became popular as a cost-saving strategy during a recessionary environment. The worldâ€™s largest organizations in this study are calling into question its efficacy in todayâ€™s economy. Companies should outsource only commodity functions to guard against a loss of knowledge and should plan for short-term outsourcing to prevent vendor dependency. Demanding transparency to costs,
negotiating for simplicity to eliminate hidden charges, and actively managing against service disruptions may improve the outsourcing experience for large companiesâ€¦but in turn they also will increase the time needed to manage the complexity and
costs of these arrangements.
In the near future, with structural risks that cannot be fully mitigated, uncertain cost savings, and a multitude of components to manage (people, process, and knowledge), outsourcing will likely lose luster for large organizations.