Yin & Yang strategic outsourcing

12.09.2006

"The higher the percentage, the stronger the incentive to outsource operations, because a higher cost efficiency can be achieved," he said. "As a shipping company, our business administration costs take up only about 10 percent, but we decided to outsource because of the strategic value that outsourcing bring us."

While there is a trend that enterprises are breaking their scope of outsourcing into smaller scale and support by multiple partners, Chan said, there are still rooms for the provider to take up a strategic role.

For example, in infrastructure outsourcing, if the enterprises use a strategic outsourcing perspective, they are purchasing not only the service to maintain the infrastructure, but also adopting a change management practice from the provider to strengthen internal IT governance.

"Strategic outsourcing very much depends on how the management perceives their outsourcing relationship. Enterprises can take their outsourcing technology to the next level only when management perceives its outsourcing partner beyond the monetary costs and benefits," she concluded.

- IDG staff contributed to this article