The benefits of outsourcing of course are variable, depoendent upon the nature and situation of the organization. However, the following is a list of common reasons why outsourcing is undertaken:

  Lower costs due to economies of scale
  Ability to concentrate on core functions
  Greater flexility and ability to define the requisite service more readily
  Specific supplier benefits. For example, better security, continuity, etc.
  Higher quality service due to focus of the supplier
  Improved internal management disciplines resulting from the exercise itself
  Less dependency upon internal resources
  Control of budget
  Faster setup of the function or service
  Lower ongoing investment required in internal infrastructure
  Greater ability to control delivery dates (eg: via penalty clauses)
  Lack of internal expertise
  Increase flexibility to meet changing business conditions
  Purchase of industry best practise
  Improve risk management
  Acquire innovative ideas
  Increase commitment and energy in non core areas
  Improve credibility and image by associating with superior providers
  Generate cash by transferring assets to the provider
  Gain market access and business opportunities through the supplier’s network
  Turn fixed costs into variable costs



Despite the size of this list, every scenario is different. There may well be equally compelling arguments against any sort of outsourcing arrangement. It is therefore important that ALL the issues are considered before embarking upon the outsourcing course. This assessment should take into account all factors, both local and generic.