Outsourcing strategies

Why outsource? Today, technological progress has reached such a level of sophistication that it is impossible for a company to have total control over the value chain of its products, from the materials they are made of to the complex distribution circuits that use multiple channels to reach the end consumer.

The globalization of trade and the opening up of borders have also led companies to operate in increasingly competitive and regionalized markets. The increase in international trade in a highly uncertain geopolitical and economic context means that they have to adapt quickly to market changes, and be agile enough to constantly adjust their resources in line with demand. As a result, reorganization becomes a quasi-permanent process, and outsourcing becomes the obvious choice when it comes to creating solutions with reduced in-house resources.

Outsourcing, i.e. entrusting certain activities to external service providers when they were previously carried out in-house, is often the only way for a company to free up resources and refocus them on other activities that it considers more central, more in line with what it considers to be its core business. This strategy is seen as an important factor in competitiveness, flexibility and responsiveness to new economic challenges (adaptability of offerings, automation of production lines and increasing product sophistication), and concerns both industrial and service activities.

At the end of the 1980s, companies began to outsource peripheral activities such as IT, reprographics and payroll management. The reason for this first wave of outsourcing was mainly economic, based on cost criteria. Other factors subsequently accelerated this phenomenon, notably the lack of in-house capacity to provide these services. Outsourcing involved transferring personnel and assets to the chosen service provider. This strategy was later extended to include functional departments such as human resources, accounting and IT asset management, before extending to the company's core functions. The closer these outsourced functions became to the company's core business, the more complex, costly and time-consuming the outsourcing process became. As a result, service providers have had to adapt and offer increasingly sophisticated and elaborate solutions.

The outsourcing of high value-added activities, including research, development and design, involves increasingly integrated relationships with manufacturers and distributors.

This article explores the challenges of outsourcing strategies, at a time when environmental and societal constraints are weighing increasingly heavily on the management of companies and their service providers. What do we mean by outsourcing, what...