Managing the Outsourcing Process

8 Pages 1970 Words

MANAGING THE OUTSOURCING PROCESS

Introduction

Outsourcing is a management strategy that helps organizations to focus on their core competences in order to gain a competitive advantage and to provide non-core functions or activities with efficient vendors. Outsourcing represents a sophisticated relationship between the organization and the vendor. Outsourcing process helps the organization to find its outsourcing vendor. Outsourcing process, which should include nine steps, is very, impotant in order to select the right vendor for the organization. (Arslantaþ 1999):


STEPS
OUTSOURCING PROCESS

1st step
Requiring Outsourcing

2nd step
Defining Organization’s Needs

3rd step
Making Outsourcing Decision

4th step
Evaluating Outsourcing Strategy

5th step
Formulating Request for Proposal

6th step
Evaluating Vendors

7th step
Selecting The Best One Among Vendors

8th step
Negotiating Contract with The Vendor

9th step
Building and Managing Effective Relationship with The Vendor



Exhibit 1. Outsourcing Process (Arslantaþ 1999)

A-Requiring Outsourcing

There are many reasons for an organization to consider outsourcing. Organizations require outsourcing in order to (Arslantaþ 1999);



achieve strategic goals


reduce costs


reduce investment expenditures


improve core competence


reduce risk


downsize and increase flexibility


accelerate reengineering benefits


access the world class capabilities


manage out of control function


access to improved technology


transfer assets


increase quality


redirect resources


manage financial resources available.


B-Defining Organization’s Needs

When organizations require outsourcing, they should define their organizations’ needs. Especially, top managers determine which functions or activities should be completed internally and whi...