November 14, 2018, 3:37 pm

Outsourcing Strategy and Contractor Management

We offer a structured approach towards the selection of appropriate activities for outsourcing, as well as a structured, 12 step process for managing the tendering process, and implementing successful contracts.

The establishment of major contracts is risky, when not carried out with due care and diligence. Many major organisations have found that, despite the promise of significant gains from outsourcing major areas of their business, these gains have not been realised. Yet, when the appropriate functions are contracted out well, outsourcing can provide benefits. This applies equally to contracts for the provision of contract mining or production services, as they do to contracts for the supply of support services, such as maintenance or on-site catering.

Those organisations that start of considering outsourcing purely as a cost-cutting measure are doomed to a sub-optimal result from the start. The reality is that that there is an inter-relationship between cost, benefit and risk. Simply trying to minimise costs can very often lead to increased risk and reduced benefits from the outsourcing arrangement, with consequential long-term adverse effects.

A better approach, and the one that we typically adopt in advising clients about the outsourcing decision is to look at the decision in terms of how important the activity proposed for outsourcing is to the organisation in achieving long-term strategic competitive advantage in its chosen marketplace, as well as how competitively the function is currently being performed compared with the external competitive marketplace.

To be effective, the outsourcing decision is a trade-off between cost, benefit and risk. It follows, therefore, in assessing competing tenders, that we evaluate and compare each of the alternatives on each of these three dimensions.

Contact us now to speak to an expert consultant.

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