What Is Strategic Outsourcing?

Strategic outsourcing is a management strategy, which means that from a strategic perspective, the company transfers some non-core or cost disadvantaged businesses to the outside of the enterprise, so that the company can use limited resources for those who expect long-term success. Core business areas that create unique value or that can make the company a leader in the industry. Strategic outsourcing is considered as an effective means for enterprises to effectively reduce product costs, introduce and utilize external resources, and help enterprises improve their core competitiveness.

Strategic outsourcing

Right!

Strategic outsourcing is a management strategy, which means that from a strategic perspective, the company transfers some non-core or cost disadvantaged businesses to the outside of the enterprise, so that the company can use limited resources for those who expect long-term success. Core business areas that create unique value or that can make the company a leader in the industry. Strategic outsourcing is considered as an effective means for enterprises to effectively reduce product costs, introduce and utilize external resources, and help enterprises improve their core competitiveness.

Strategic outsourcing is not only the readjustment of the business process and management scope of an enterprise, but also the recombination of key links in the enterprise value chain. It is the product of further refinement of social production and intensified competition. The essence of outsourcing is to realize the sharing and optimization of intellectual resources, service resources, market resources and information resources. Its core is to improve the overall production efficiency of the enterprise in order to achieve the purpose of increasing profits. . A complete outsourcing decision includes the stages of outsourcing business selection, outsourcing program evaluation, outsourcing contract management, and monitoring of outsourcing services.

Chinese name

Strategic outsourcing

Foreign name

Strategy Outsourcing

The advantages of adopting strategic outsourcing strategy are:

1. Through outsourcing of non-core business, the company will concentrate resources on the core business of the enterprise, enhance the flexibility of business operations, accelerate the speed of corporate decision-making and reduce management costs;

2. Get better products at a lower cost through outsourcing and reduce the cost of part of the business;

3. It can make the enterprise avoid the business risk of getting involved in the industry due to excessive front-back integration.

Generally speaking, strategic outsourcing mainly has the following models:

1. Production outsourcing. The earliest emergence of production outsourcing was the outsourcing of labor-intensive industries.

2. Sales outsourcing. It comes in two forms: one is a sales agent and the other is a franchise. Many companies now build sales channels by recruiting agents and distributors.

3. Outsourcing of mental resources. Including R & D outsourcing, consulting outsourcing and training outsourcing. Enterprises can entrust technical projects, consulting, planning and training to the corresponding professional organizations to complete, and use external brain resources of the enterprise to serve the enterprise.

4. Management outsourcing. The company delegates some of its management functions to external professional companies. The more common ones are financial management, logistics management, office administrative management, and human resource management. The company saves management expenses, frees itself from complicated daily management, and focuses on the part that creates profits, thereby ensuring market excellence.

5. Logistics outsourcing. Logistics outsourcing is also called third-party logistics, and the logistics agency enterprises hand over all logistics activities to professional logistics companies.

6. Customer relationship outsourcing. Enterprises can hand over those client business that is not a core business activity or cannot be processed at a lower cost to an outsourcer for management, forming a customer relationship outsourcing. There are also IT application service outsourcing.