This article clearly defines ‘outsourcing’ and why companies are involved in the decision to outsource an organization’s resources. The decision to outsource can lead to competitive advantages for businesses. Firms should consider outsourcing when it is believed that certain support functions can be completed faster, cheaper, or better by an outside organization. Tasks that are not core competencies of the organization are candidates for being contracted out. Today, the outsourcing of selected organizational activities is an integral part of corporate strategy.
This article helps us to establish the advantages and disadvantages of outsourcing as identified in our research objectives. For corporations, advantages of outsourcing are substantial: reduced costs, expanded services and expertise. Outsourcing allows companies to refocus their resources on their core business. Corporations can buy technology from a vendor that would be too expensive for them to replicate internally. On the other hand disadvantages of outsourcing include; the fear of losing control and wrongfully matching needs to what supplier can provide.
Power et al. (2004) states that through having an excellent understanding of outsourcing and then integrating this into the organisations business strategy and goals leads to advantages of reduction of cost, focus, enhanced quality and reduction in time to market. This article highlight areas that Global Teleco will have to be aware of if they wish to be successful in outsourcing and reaping the benefits from using such a business strategy. This article will also provide guidelines in setting up a framework for the implementation of outsourcing for Global Teleco.
McIvor (2003) identifies the drivers and processes that can influence outsourcing specifically within the telecommunications industry. Through the analysis of a company and three suppliers over a period of 18 months, the author provides a real insight to outsourcing and provides a clearer understanding of how to successfully implement outsourcing strategically. McIvor(2003) presents the cause of ‘system integrators’ for such businesses within the industry, seeing the managing and coordinating of a network of best production and service providers.
An emphasis on analyzing and using the supply market when outsourcing, rather than attempting to identify core competencies, is argued to have a more significant influence enhancing the competitive position. Strategically, a company should select and manage the most competent source to carry out each operational activity within the value chain that is outsourced. In order to ensure the successful implementation of outsourcing, a cross-functional view is required across the entire company and the external customer.
The findings of the research by McIvor(2003) emphasize the need to ensure cost analysis and collaboration with suppliers in order to overcome difficulties that may be faced when outsourcing. This article also provides a detailed perspective on strategy formulation, core business definition as a means to identify what activities to outsource and motivating factors for outsourcing. This article therefore presents a clear insight to the telecommunications industry today and how other businesses are doing it.