Which Capabilities Should You Outsource--and Which Should You Keep In-House?
How to maximize outsourcing's value? Make strategic decisions about which capabilities to outsource and which you'll handle in-house. Use this three-step process:
1) List all your capabilities--including HR, finance, IT management, logistics distribution, product development, and packaging.
2) Identify capabilities with "high proprietary value." Your company executes these in ways that generate measurably more value than rivals could. And your company would suffer major strategic damage if rivals imitated them.
3) Identify capabilities with "high commonality." Outside suppliers could achieve scale or other advantages by providing these to many others in your industry.
Outsource capabilities that have low proprietary value and high commonality.
October 7, 2008; 6:57 AM ET
Management Tip of the Day
Previous: Why Shoot Straight in a Crooked World? | Next: Are You Using the Right Supply Chain for Your Product?
Please email us to report offensive comments.
Posted by: Sarah Sadowsky | October 7, 2008 2:59 PM
The comments to this entry are closed.