The Trouble With Outsourcing

Outsourcing has been tried in every field – from manufacturing to security – relying on specialized companies to provide efficient service or parts at a low price. “There are signs that outsourcing often goes wrong, and that companies are rethinking their approach to it,” reports this article in the Economist. The mishaps behind the manufacture of Boeing’s Dreamliner, with supply-chain delays and mismatched parts, was a wakeup call for many firms. One quarterly index on outsourcing suggests the total value of outsourcing contracts is falling. Legal disputes are common when vendors overpromise on price and quality, or managers push too hard and encourage cutting corners. Companies that have cut key staff and turned over sensitive data to outsiders find it difficult to end an outsourcing relationship. More successful outsourcing stems from short-term, flexible deals with diverse vendors. Outsourcing works best with non-core parts of a business. Managers must remain vigilant over the essential aspects of product development and delivery. – YaleGlobal