To Outsource Or Insource?

Outsourcing can provide technological advantages but loss of control is a problem.

As companies have grown more comfortable with the shared service approach, some have asked whether it makes sense to move a step further and hire an outside party to run the operation, says Tim Lloyd, partner with London-based ALS Consulting Ltd. On the positive side, a third party that focuses only on shared services may be more likely to invest in new tools and technology. Going with a third party also may enable a company to more quickly launch a shared service operation.

On the other hand, some loss of control is likely. Executives wouldn't want to outsource functions that are unique to their company, notes Richard Sypniewski, practice director for accounting and finance operations with Parson Consulting, Chicago. For instance, a company that produces highly engineered products may negotiate individual contracts with each client. Before management transfers responsibility for accounts receivable to an outside firm, it will want to determine how much information the firm will need, and the extent to which the firm will be able to act on its own when working with clients.

See Also: Sharing The Wealth: Shared service centers offer more than just consolidation of services -- when planned correctly.

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