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Cost Savings The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through off shoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations. |
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Com-modification The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of businesses access to services previously only available to large corporations. |
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Time Zone A sequential task can be done during normal day shift in different time zones - to make it seamlessly available 24x7. Same/similar can be done on a longer term between earth's hemispheres of summer/winter. |
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Catalyst for Change
An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.
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Cost Restructuring
Is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.
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Reduce Time to Market The acceleration of the development or production of a product through the additional capability brought by the supplier. |
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Operational Expertise Access to operational best practice that would be too difficult or time consuming to develop in-house. |
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Improve Quality Achieve a step change in quality through contracting out the service to professionally trained staff. |
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Contract Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services. |
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Risk Management An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation. |
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Knowledge Access to intellectual property and wider experience and knowledge. |
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Staffing Issues Access to a larger talent pool and a sustainable source of skills. |
