Outsourcing Dilemma: The Search for Competitiveness, The

Risk reduction

The accelerating rate of change means that each and every investment an organization makes becomes ever more risky. Competitive activity, technology and legislation can all change overnight.

The outsourcing service provider is subject to the same risk but this can be significantly reduced when the investment is made for and spread over the work carried out for a range of clients.

Outsourcing can produce its own unique risks. Nike, the owner of the sports shoe brand, developed a strategy for outsourcing the manufacture of its shoes. Over a period of time, more and more production was centred on plants in Asia. After the usual initial teething troubles, they started to get satisfactory product at a relatively low cost.

Then Nike ...