Ask Peter F. Drucker an all times great guru of management, about outsourcing:

Peter Drucker (expired in November 2005) has contributed over 30 articles to HBR, more than any other contributor till now. Following are two brief excerpts from his interview with T. George Harris (Drucker’s friend for 24 years then) at DMC of CGS in California about his book’s (“Post-Capitalist Society” ; HarperCollins, 1993)

“Believe me; the trend toward outsourcing has very little to do with economizing and a GREAT DEAL to do with quality.”

A company should “outsource all work that does not have a career ladder up to senior management”

Benefits of Outsourcing

By outsourcing, you can: 

  1. Reduce overheads, free up resources for alternative use
  2. Minimize capital expenditure
  3. Eliminate investment in fixed infrastructure
  4. Offload non-core functions from your business
  5. Redirect energy and personnel into the core business
  6. Free your executive team from day-to-day process problems
  7. Focus scarce resources on mission-critical projects
  8. Get access to specialized skills
  9. Reduce need for internal commitment of specialists
  10. Save on manpower and training costs
  11. Control operating costs

12. Improve efficiencies through economies of scale
13. Improve speed and service
14. Level out cyclical or seasonal fluctuations
15. Eliminate peak staffing problems
16. Provide the best quality services, products and people
17. Be reliable and innovative
18. Provide value-added services
19. Increase customer satisfaction
20. Establish long-term, strategic relationships with world-class service providers to gain a competitive edge
21. Enhance tactical and strategic advantages
22. Focus on strategic thinking, process reengineering and managing trading partner relationships
23.Benefit from the provider's expertise in solving problems for a variety of clients with similar requirements.

  1. Obtain needed project management and implementation consulting expertise
  2. Acquire access to best practices and proven methodologies
  3. Spread your risks
  4. Avoid the cost of chasing technology
  5. Leverage the provider's extensive investments in technology, methodologies and people
  6. Reduce the risk of technological obsolescence
  7. Increase efficiency by consolidating and centralizing functions
  8. Keep pace and minimize the impact of rapid changes in technology without changing your infrastructure
  9. Reduce the overall management burden while retaining control of strategic decision making.