Chapter 5. Outsourcing in the Extended Enterprise

Earlier chapters of this book developed the notion that in the extended enterprise, the choice of suppliers and the management of relationships with suppliers should flow from the strategy of the firm and its recognition of what is of core importance and what is not. Outsourcing, as it has evolved today, provides a good example of this process. Before illustrating this, it might be helpful to review briefly the history of outsourcing and its recent trends.

Background and Trends

Outsourcing—the shifting of work to organizations or individuals outside the firm—is not a new phenomenon. Construction companies have always subcontracted large portions of their project work to outside contractors, and the ...

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