Outsourcing -- 1

Outsourcing
Part One

See also:
Outsourcing -- Part Two
Outsourcing -- Part Three
Outsourcing Information Technology Systems and Services
Are We Indispensable?
The Best Gift Arrived in a BIG PACKAGE

          Many techies were aghast with the recent announcement by the Microsoft Corporation -- the Colossus of the hightech world headquartered in Redmond, Washington -- that it had awarded a three-year contract to Entex Information Services, Inc. based in Rye Brook, New York, to oversee the worldwide management and operation of Microsoft's 16,000 computers and computer networks. Now, when a Microsoft employee has a hardware or network systems problem, an Entex employee will respond to the technical support request.

          What's happening? Why would Microsoft -- the Master of the Universe in the eyes of many -- turn over the critical job of assuring the reliable operation and performance of its own computers and computer networks to a little-known outsider?

          There are two parts to the answer to these questions. First, while relatively small, Entex is well-known and respected in the niche of the industry it is serving. It has been delivering similar services to the Intel Corporation, Motorola, Inc., and the Oracle Corporation -- all leaders within their respective segments of the vast computer industry.

           And second, each of these companies want to concentrate on their core competencies. They do not want to become entangled with and waste their time performing routine computer support and maintenance. Quite simply, Microsoft probably does not want their skilled software engineers or managers becoming distracted solving hardware and network glitches. It makes much more sense to contract this work with a knowledgeable and reliable specialist. Knowledgeable and reliable are the requisite qualifications.

          "Outsourcing" has become one of the fashionable management buzzwords of the 1990s. Outsourcing is the strategic use of outside resources to do tasks that would traditionally have been done in-house. While outsourcing is scarcely a new concept, it has become much more prevalent over the past decade as major corporations have undergone "restructuring" and "downsizing." And outsourcing can open a world of opportunities for the owner/manager of the smaller business. In a composite survey undertaken last year by The Outsourcing Institute in New York City, the ten most important reasons corporations outsource are:

Improve company focus,
Gain access to world-class capabilities,
Accelerate the benefits of re-engineering,
Share risks,
Free non-capital resources,
Make capital funds available,
Reduce operating costs,
Seeking cash infusion,
Resources not available internally, and
Function difficult to manage.

          Many of these reasons present an immediate invitation to the smaller business to meet some of these specific needs of a major corporation -- profitably. Striving to focus their energies more on the "what" of their businesses rather than on the "how," these corporations offer literally thousands of outsourcing opportunities. The owner/manager of the smaller business must identify the tasks that his/her enterprise is uniquely well-qualified to undertake. The responsible corporate executive is often not aware initially of an outsourcing opportunity.

          Many smaller businesses have found that conducting a needs assessment is the key to the outsourcing process. This offers the occasion to become more fully familiar with the corporation's operations and people -- and in some situations, the corporation's customers. At the same time, the corporate executives are able to assess the unique competencies of the smaller business and its people, and to begin to view the smaller business as a possible partner long before a proposal is presented. It is essential to help the corporate executives overcome the "not invented here" barrier. The corporate executives must be fully comfortable; they must recognize that their outsource contractor demonstrates the requisite qualifications of being knowledgeable and reliable.

           Often beginning as very small businesses, outsourcing has been the avenue to growth and profitability for many of today's Fortune 500 ® corporations. And today, outsourcing opportunities are more abundant than ever before. Frequently, we are hobbled only by our own lack of vision and imagination!

Your comments and suggestions for these pages are most welcomed!
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Thomas A. Faulhaber, Editor
Email: [email protected]
Telephone: 617.232.6596 -- FAX: 617.232.6674

Brookline, Massachusetts 02446.2822 USA

[email protected]

URL: http://www.businessforum.com/outsourcing1.html
Revised: November 10, 2004 TAF