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Cost savings
The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through off shoring. |
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Focus on Core Business
Resources (for example investment, people, infrastructure) are focused on developing the core business. For example organizations often outsource their IT support to specialised IT, Finance, Accounting and Marketing services companies. |
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Cost restructuring Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable. |
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Improve quality Achieve a steep change in quality through contracting out the service with a new service level agreement. |
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Knowledge
Access to intellectual property and wider experience, and knowledge and know-how that is not available within the organization |
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Operational expertise Access to operational best practice that would be too difficult or time consuming to develop in-house. |
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Access to talent Access to a larger talent pool and a sustainable source of skills. |
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Reduce time to market The acceleration of the development or production of a product through the additional capability brought by the supplier. |
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Tax Benefit Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country. |