Outsourcing – the London 2012 debate

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It’s all Twitter’s fault. I was about to start doing real work and then I saw this short article on outsourcing for the London 2012 Olympic games from the CIPS News page.

I have to echo CIPS CEO David Noble’s comments about taking a rational approach to the outsourcing decision rather than making it into a political decision. And that started getting me thinking about outsourcing in general.

I have heard the argument made that outsourcing is generally neither a good or a bad thing…which is right to an extent. The argument goes that when you look at the decision from a cost perspective, whether to outsource or not is simply a decision regarding how to divide up the overheads. However, I like to take a closer look at the situation.

I believe that an organization must decide what is strategically important to them, and what is less so (which is different than ‘not strategic’). I am cringing while writing that last sentence, because many business people are not capable of truly saying ‘this activity is important, but is less strategic when measuring the activity relative to all the other value-generating activities that we perform.’ So consider the grain of salt added.

The reason for the emphasis on what is strategic boils down to who is better at managing an activity. To the extent that an organization can be honest with itself (generally down to the level of introspection of a key leader or group of leaders), that organization will make the right call on in-sourcing or outsourcing. Almost anyone can acquire the technical know-how, but not everyone can manage that activity well or know how to value the activity in the context of the overall value chain (e.g. I may be good at managing something that consumes a lot of my time and whose major problems and obstacles have already been solved/overcome). In this scenario, I’m in danger of re-inventing the wheel.

I could continue rambling, but then I would have to send 8 bosses around to my own desk to tell me how we do things here.

Leave comments and thoughts below. I know you have some.

London 2012 banner at The Monument.

London 2012 banner at The Monument. (Photo credit: Wikipedia)

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