Outsourcing is Growing
According to the research firm of Coopers & Lybrand, 81% of American companies use outside sources to perform some function. This compares to 50% five years ago, and the trend of turning to the outside for capabilities continues to grow. As the new millenium nears, companies have come to understand that outsourcing is a viable way to improve their core business, while reducing expenses, personnel and overhead. Contracting out tasks that are not part of a company's core competency can free up cash for other, higher return investments. Also, managers can focus on issues that are key to growing their business in product development rather than getting caught up in the day to day labors of manufacturing. Finally, it is the ability of the contract supplier to respond to the peaks and valleys typical in the manufacturing process that makes outsourcing so rewarding for a company.
Top 10 Reasons Companies Outsource
- Reduce and control operating costs
- Improve company focus
- Gain access to world-class capabilities
- Free internal resources for other purposes
- Resources are not available internally
- Accelerate reengineering benefits
- Function difficult to manage/out of control
- Make capital funds available
- Share risks
- Cash infusion
Source: Survey of Current and Potential Outsourcing End-Users
The Outsourcing Institute Membership, 1998
