Strategic outsourcing

Strategic outsourcing
See also
Relations between supplier and customer Transformational outsourcing Spin-off Tactical outsourcing Outsourcing agreement Outsourcing Criteria for selecting suppliers Principles of Supply Chain Management House of total quality model

The primary distinguishing features of this type of outsourcing are associated with a company approach to objectives and benefits of outsourcing. Main assumptions of the implementation of the strategic outsourcing are:

• ability to focus management activities and resources on core business,
• extend range of outsourced processes compared with the tactical outsourcing,
• giving up involvement in the supervision of outsourced activities by the company's management,
• limiting the number of service providers to those offering comprehensive services and providing the highest quality of service,
• partner relationship with service providers, based on mutual benefits.

From the point of view of the strategic nature of this outsourcing above mentioned benefits are seen as essential. Those benefits are subject, however, to adopted conditions of cooperation with the service provider.

In spite of the increased (in comparison with the tactical outsourcing) requirements for service provider, the basic premise of strategic outsourcing is limiting the amount of units, with which the customer undertakes cooperation. This is one of the distinguishing features of the strategic outsourcing. In tactical outsourcing main emphasis was on reducing the risk of non-performance or improper performance of the outsourced tasks, and thus to make cooperation with more units providing services to the same extent. Services provided by specialized units often determine company's survival on the market (for example: logistics services, information technology services). Different expectations of specialized service providers make relationship known as "by-client" turn out to be insufficient in strategic outsourcing. Involvement of service providers in improvement of service processes together with the company is associated with the provision of partnerships based on the equal status of cooperating units and on the mutual benefits [D. Brown, J. Wilson, 2005, s. 24].

References

• Quinn, J. B. (1999). Strategic outsourcing: leveraging knowledge capabilities. MIT Sloan Management Review, 40(4), 9.