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7. Conclusions Outsourcing has become very popular as a business strategy in many industries around the world. The new strategy involves the decision to move an activity, that was conducted in house, to an outside provider. A careful outsourcing process is crucial for its success. The outsourcing strategy should be in line with the overall corporate strategy. Program Outsourcing as a business concept Definitions and concepts Rationales for outsourcing The outsourcing process Risk assessment Success factors Conclusions 1. Outsourcing as a business concept Outsourcing as a business concept Previously: mainly outsourcing of activities trend Currently: complete business functions are outsourced Viable business strategy FIGURE 8.1 current and future outsourcing levels by activity 2. Definitions and concepts Definitions In general, outsourcing can be described as the transfer of activities that were previously conducted in-house, to a third party. “The decision and subsequent transfer process by which activities that constitute a function, that earlier have been carried out within the company, are instead purchased from an external supplier.” Characteristics of outsourcing In-house performed activities are transferred to a third party Assets, knowledge and sometimes employees are send to the external party Extended and long term relationship Buyers from both parties experience new costs and risk profiles Definitions en concepts Offshoring: relates to the commissioning of work to a provider in a low cost country. In many cases offshoring is concerned with outsourcing of (IT) services. Nearshoring In a nearby low cost country Onshoring In the same country Definitions en concepts Partial outsourcing: only a part of an integrated function is outsourced. The coordination of the function and activities still lies with the client (the buyer). a major problem is of course how to demarcate the responsibility between the parties involved. Turnkey outsourcing: appl
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