Should I Outsource? The pros and cons of outsourcing are significant, as are the potential gains for companies that are successful. This short video introduces some of the ways outsourcing can be a boon to growth and efficiency, but also points out how important it is to make the right strategic decisions about sourcing.
With outsourcing, we can speed up our operations, lower our costs, and even open up entire new markets. But we don’t want to become one of the nightmare stories you hear about.
Outsource For The Right Reasons
Apple could never have become one of the world’s richest companies if it had not expanded outside the United States. With outsourcing we can automate our business processes, so that we don’t need a large internal staff, or we can turn to China for incredible manufacturing capacity. We can put offices around the world and have 24 hour operations by following the sun. We can even bring on board an entire new department overnight, if we need to.
But, it’s easy to make mistakes. Business culture is very important, and incompatible business culture leads to problems. For example, Audi recently had to recall thousands of cars because their Chinese manufacturer had substituted a substandard material, and gas pedals started snapping off.
It’s important to realize that different cultures and different markets are better suited to particular needs. Cost, quality and skill varies around the world. Technology is strong in China, but intellectual property protection is not. Apple gained huge advances by engaging with Foxconn in China but, 24 hours later, there were clone iPhones popping up on the market.
Multiple cultures bring complexity. And it’s important to remember that America is pretty isolated. Most of the world focuses on building very strong long term relationships. It’s those relationships that protect your business. Trusted relationships are key, and in most of the world, it’s more important to have experience and a trusted relationship than to have a written contract.