Operations Management For Dummies

Chapter 17

Considering Outsourcing

In This Chapter

Understanding outsourcing’s pros and cons

Deciding what to outsource and choosing a supplier

Managing outsourcing relationships

Atidal wave of outsourcing — a term meaning that a company hires another firm or firms to perform specific operations — has been hitting businesses throughout the United States since the 1990s. Before, firms typically only outsourced support tasks such as human resources management or janitorial services. Then came call centers and technical support. Nowadays, companies are even outsourcing the production and delivery of the products and services that make up their core business. If these production and delivery operations aren’t performed well, a firm’s costs can increase, customer service can suffer, brand reputation can be harmed, and market share can decline — sometimes fatally.

This chapter describes the pros and cons of outsourcing and highlights the three most important decisions for successful outsourcing. We also point out some critical factors of outsourcing, including product design and management.

Seeing the Upsides and Downsides of Outsourcing

Hiring a separate company to build a product or ...