Strategic Outsourcing: The Influence Of Strategic Outsourcing

Introduction

Outsourcing is increasing becoming a fixture in the business models of the 21st century. Initially restricted to non-strategic business activities, the popularity of outsourcing has risen to a point of encompassing the core functions. This prompts the rise of strategic outsourcing, which the paper seeks to evaluate. Evidently, outsourcing offers strategic benefits that are too compelling for organization to ignore, which explains their push to integrate outsourcing into the fabric of the business operations.

Strategic Outsourcing

According to Lu (2011), strategic outsourcing entails the decisions and processes of obtaining the supply of a service or product externally to another organization identified to have strategic significance.

A strategy is a consequence of a decision process or a result of a strategic evaluation of ‘make or buy’ often involving the transfer of activities to third parties. Strategic outsourcing includes the activities that were not previously undertaken in-house with its difference from contracting-out and subcontracting based on long-term relationships and the obligation of means and results (Guimaraes & Carvalho,

Whereas, at a strategic level, outsourcing provides a solution to achieve more with less (Guimaraes & Carvalho, 2013). The strategic intent implies seeking to achieve more than fit between the available resources and current resources. Rather, this seeks to establish the misfit between resources and long-term ambitions. Thus, an outsourcing decision that serves strategic intents brings wider results at the firm performance level, rather than pursuing tactical and punctual functions of cost reduction (Guimaraes & Carvalho,