THE CONCEPT OF OUTSOURCING, ITS PURPOSE AND POTENTIAL RISKS

Abstract

Misuse of outsourcing plays a significant role in reducing the sustainable competitiveness of many Western firms. Western managers often view outsourcing as a defensive operation. The approach tends to be incremental. Individually adopted incremental outsourcing decisions may make economic sense, but together they may represent a surrender of business competitiveness. Nevertheless, outsourcing, properly understood and managed as part of an overall strategy, can contribute to competitive advantage. This article is based on the authors’ research with North American firms. It discusses how improper use of outsourcing in Europe and Asia can undermine the future of business and how proper use of outsourcing can help create competitive advantage