If you’ve decided to start outsourcing in order to save money and increase efficiency in your business, the next decision is where to begin.
Choosing the right processes to outsource is a very important part of a successful outsourcing strategy.
Start by doing a thorough analysis to assess your company’s core strengths. These are the activities that add value for your customers and/or set your company apart from the competition.
Harvard Professor Michael Porter introduced the model of the value chain in his 1985 book Competitive Advantage, in which he identified a typical company’s primary and support activities, as you can see in the diagram.
You can easily identify your company’s key strengths by thinking about which processes are directly related to creating and delivering your main products or services. Consider also, processes in which your company excels. These are the areas you will want to keep in house.
You might want to conduct a brainstorming session to help create a list of core competencies vs. activities that could be better performed by an outside company.
You can break this down further by analyzing tasks within your core areas to identify those activities that do not add value or do not create a cost advantage.
Other factors to consider are whether handling a certain process in house would require a significant investment in equipment; also whether the activity carries risks that would be better handled by an outsourced provider.
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