In Part 1 of “What to Outsource?“, we outlined a simple process for identifying your organization’s core competencies using Michael Porter’s Value Chain Analysis.
Once you’ve determined the processes and services within your company that make up your core competencies, you can review and assess the leftover processes to determine whether it makes sense to outsource them. These leftover processes are your non-core business processes.
If you don’t think your company or organization has any non-core business processes, start over; you’re not looking hard enough. Remember to take a good look at your company’s operations and back-office processes. Assuming they aren’t your competitive advantages, back-office processes and services are typically excellent candidates for outsourcing. Consider them the “low hanging fruit” in your portfolio of services to be outsourced. In your search for your non-core business processes, pay particular attention to the following:
- Those activities that are repetitious
- Those activities that are ongoing
- Those things you know you’re not good at executing
After you identify the things that CAN be outsourced, you need to determine whether they SHOULD be outsourced and, if so, in what order.
Before making that decision, however, you need to determine whether outsourcing this service makes sense with your overall business strategy. Specifically, you need to consider the risks involved. In our next article Understanding Outsourcing Risks, we’ll discuss the risks involved and a guide for assessing whether the benefits outweigh the risks.
Works Cited
Ed Ashley. (2008). Outsourcing for Dummies. Hoboken, New Jersey: Wiley Publishing, Inc.
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