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Outsourcing Project Management

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Outsourcing

Outsourcing is a strategy that concentrates an organization’s resources on its core competencies allowing the organization to achieve a definable preeminence and provide a unique value for customers (Behara, Gundersen, & Capozzoli, 1995, p. 45). The goals of outsourcing are strategic: improved efficiencies, lower costs, improved flexibility, higher quality, and a greater ability to achieve a competitive advantage.

The ultimate strategic goal is to develop core competencies that develop into barriers of entry that make it difficult for competition to copy. By focusing on core competencies, and utilizing qualified vendors to provide process that are not one of the organization’s core competencies, the organization’s risk can be shared with its suppliers, and minimized. Core competencies are the collective institutional learning and capabilities of the company that allow it to supply products and services that uniquely add absolute preeminence in those competencies (Hilmer & Quinn, 1994, p. 47). “Core competencies are the innovative combinations of knowledge, special skills, proprietary technologies, information, and unique operating methods that provide the product or the service that the customer value and want to buy” (Greaver, 1999, p. 87). Activities that the organization must be proficient in are called its core activities. Core activities are those activities that are:
1. Traditionally performed internally with long standing precedence.
2. Critical to business performance.
3. Create current or potential competitive advantages.
4. Drive the future growth, innovation, or rejuvenation of the enterprise. (Alexander & Young, 1996, p. 22) When outsourcing decisions are made on the basis of an in-depth understanding of the organization’s core competencies, and are intended to build or enhance the organization’s competitive

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