Outsourcing, from the English outside-resource-using, means using external sources of supply. In reality, companies decide to separate certain areas of their operations that are of lesser importance from the point of view of creating a competitive advantage, transfer their execution to external parties, and focus on core competencies.
For example, computer hardware manufacturers that previously had their own transport “outsource” or liquidate their own transport department. The opposite of outsourcing is insourcing, which consists of incorporating into the enterprise certain functions/activities previously carried out by a separate business entity. Such a situation may occur if a company, for example, expands its scope of competencies, thereby changing its market strategy. Currently, however, outsourcing phenomena occur more frequently and are becoming the subject of detailed analysis by the enterprise. It can be capital-based or contract-based. In the first case, there are capital links between the entities, e.g., the separated or newly created entity holds shares of the parent company. In the second, the entities are independent. For separation to occur, it is necessary for both sides to meet specific conditions:
– on the part of the parent unit:
• acceptance of the separation strategy by the owners and company management
• expected improvement in the functioning of the enterprise in strategic, market, organizational, economic, and motivational aspects
• ensuring effective control of the separated unit.
• acceptance of the separation strategy by the owners and company management
• expected improvement in the functioning of the enterprise in strategic, market, organizational, economic, and motivational aspects
• ensuring effective control of the separated unit.
– on the part of the separated unit:
• an autonomous area of activity that is market-separated, object-separated, or territorially separated
• objective determination of economic results as the basis for its activity
• improvement of operational effectiveness in the following aspects: strategic, market, economic, organizational, operational, motivational
• acceptance of the separation by the employees of the separated unit.
• an autonomous area of activity that is market-separated, object-separated, or territorially separated
• objective determination of economic results as the basis for its activity
• improvement of operational effectiveness in the following aspects: strategic, market, economic, organizational, operational, motivational
• acceptance of the separation by the employees of the separated unit.
The article comes from the magazine “Logistyka” 2002/4.