An Analogy for the Outsourcing Industry

Includes: ACN, DXC
by: Outsourcing Insider

Outsourcing can be viewed as something that is quite similar to a weight-loss program. The connection between these two things may be entirely ambiguous, but believe it or not, there are similarities -- especially when it comes to the reasons that drive companies to outsource. It is often that companies seek outsourcing for the cheap operational costs that are being offered. It's quite similar to how people flock to a particular weight-loss program just because it offers the public a guarantee that it will shed off pounds quickly.

But what people do not see is that this should not be the only factor that they will consider when looking for a program. Exactly like outsourcing, where most companies are too focused on the promises of outsourcing to lessen their costs, when they should also be looking at other things such as the efforts that they are to exert and the time they are to allot when they conduct outsourcing. A company must also look into whether the outsourcing solutions the provider offers are what it really needs.

However, even if there are still a couple of things to consider before outsourcing, it still has captured the attention of many companies because not only do companies offer solutions at a lower cost, most of them now provide a set of solutions that may cover a number of company processes. This could be the main attraction for companies to engage in a partnership with an outsourcing solutions provider, since it would be easier for a company to manage its outsourced projects, only dealing with one outsourcing solutions provider.

As companies today target to meet market demands, they are bringing themselves closer into becoming a one-stop shop by engaging in acquisitions and partnerships. Acquisitions and collaborations between companies are becoming more common so as to help them extend their global reach and their target client. Take for example CSC, who made an announcement this June that it has acquired Sao Paulo-based IT services company VIXIA Consultoria e Tecnologia Ltda. This was in conjunction with the statement made by CSC that it has increased its presence in Latin America two years ago after the company provided solutions for the financial services industry. Having acquired a Brazilian company, it now seems that CSC is already acting upon its vision of becoming a major provider of consulting and systems integration services in the region.

Another company that has partnered with a foreign company is Accenture (NYSE:ACN) to strengthen its presence in a particular region. Saudi Arabia-based Al Faisaliah Group and Accenture have engaged in a partnership that will demonstrate a stronger presence in the Middle East, especially because this partnership will enable Accenture to combine its solutions with the solutions being offered by the Al Faisaliah Group.

Clearly, the companies that are interested in outsourcing have many options today -- more than before because of the collaborations conducted by outsourcing companies, giving them the opportunity to create more innovative solutions. But it is always suggested for companies to dig deeper into understanding the company instead of jumping right in with both feet. Having understood what the company is really offering will save your company from having a thin budget.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.