Outsourcing and business-process reengineering

Outsourcing and business-process reengineering

What is outsourcing and what is its benefits? they are always questions which companies seek satisfactory answers. This post are taking about a study being invested carefully on the field.

Outsourcing is defined in this study as the organizational practice of contracting for services from an external entity while retaining control over assets and oversight of the services being outsourced. The practice of contracting for, or
outsourcing, services by industry and government is not new. The federal government, for example, has contracted with the private sector for facilities acquisition services, including planning, design, and construction services, for more than a century. In the 1980s, however, a number of factors led to a renewed interest in and emphasis on outsourcing. For private-sector organizations, outsourcing was identified as a strategic component of business-process “reengineering” designed to streamline their organizations and increase their profitability. In the public
sector, growing concern about the federal government’s budget deficit, the continuing, long-term fiscal crisis for some large cities, and other factors led to efforts to restrain the growth of government expenditures and accelerated the use of a wide range of privatization measures, including outsourcing for services (Seidenstat, 1999).

Outsourcing and business-process reengineering

The literature on business management has focused on business-process reengineering in the context of a private sector organization’s financial, management, time, and staffing constraints. The goal of reengineering is to increase profitability by becoming more competitive and significantly improving critical areas of performance, such as quality, cost, delivery time, and customer service. The underlying premises of reengineering are: (1) the essential areas of expertise, or core competencies, of an organization should be limited to a few activities that are central to its current focus and future success, or bottom line; and (2) because managerial time and resources are limited, they should be focused on the organization’s core competencies. The purpose of reengineering, then, is to streamline organizations by focusing on the core competencies required for them to compete successfully in the marketplace. Additional functions may be retained by the organization, or in-house, to keep competitors from learning, taking over, eroding, or bypassing the organization’s core competencies (Pint and Baldwin, 1997).

Source: Adapted from “Outsourcing management functions for the acquisition of Federal facilities”, National Academy of Sciences.

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