It is quite rate to find companies that create and sustain value consistently. While a lot of companies attempt to, studies show that only one in 10 businesses achieved sustainable and profitable growth. There is only one activity that separates the winners from the rest of the pack: they are more innovative in their use of capability sourcing than their competitors.
Companies started outsourcing and offshoring as a means of cost-cutting. But as the trend grows, companies began to use it achieve more than that. They have strategically gained capabilities that they wouldn’t have, if they relied mainly on their in-house resources. Most successful ventures use capability-sourcing strategically for major things, ranging from building world-class talent to bringing new products into the market faster and to enabling innovate their business model. The importance of outsourcing in fact, has gone beyond mere cost-cutting.
Research have shown that leading companies use outsourcing to build the below five strategic capabilities.
1. Global talent.
One factor that adversely affects a company’s ability to grow in emerging markets particularly is the shortage of talents. Outsourcing is a major way to access global talent.
2. Building value-capturing and less risky partnerships.
Even with the increase of sourcing risks, many companies have continued to manage their sourcing relationships, and effectively reducing the risks as they do so. They have always devised a way to exert control. Companies simply regard their external relations as strategic partners and tightly integrate them with their overseas subsidiaries or domestic operations. In addition to these sourcing safeguards, the company also continually monitors its factories overseas to ensure stable quality management systems. You eliminate the risk of a quality issue by limiting potential problems and acting quickly when one occurs to prevent it from happening again.
3. New local market opportunities.
All a company needs to do as new markets emerge, is to find ways to establish a presence ahead of their competitors. A good start would be by making large-scale offshoring investments in key sectors such as manufacturing and sales. You may also want to partner with key local institutions, government organizations and companies.
4. Move products into market faster, boost innovation.
If you are into consumer products, it is important that your products hit the market ahead of your competitors. This is important in a rapidly changing market.
5. Disruption of traditional business models.
You could decide as a manufacturer to spin-off your contract manufacturing operations, outsourcing everything you have a harder time with, to countries that are more favorable in production and human capital. You stand a great chance of using capability sourcing to grow your business and gain a significant market share.
These formulas have been created and constantly replicated and applied by companies. Sometimes they just build an internal organization to effectively manage partner relationships and transfer the experience gotten from one project into the next. It is therefore, advised that you adopt strategic capability sourcing as a way of possibly making a headway in the competition.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.
Rebecca Bryan says: 
Outsourcing Can Cut Costs…and Much More!
It is quite rate to find companies that create and sustain value consistently. While a lot of companies attempt to, studies show that only one in 10 businesses achieved sustainable and profitable growth. There is only one activity that separates the winners from the rest of the pack: they are more innovative in their use of capability sourcing than their competitors.
Companies started outsourcing and offshoring as a means of cost-cutting. But as the trend grows, companies began to use it achieve more than that. They have strategically gained capabilities that they wouldn’t have, if they relied mainly on their in-house resources. Most successful ventures use capability-sourcing strategically for major things, ranging from building world-class talent to bringing new products into the market faster and to enabling innovate their business model. The importance of outsourcing in fact, has gone beyond mere cost-cutting.
Research have shown that leading companies use outsourcing to build the below five strategic capabilities.
1. Global talent.
One factor that adversely affects a company’s ability to grow in emerging markets particularly is the shortage of talents. Outsourcing is a major way to access global talent.
2. Building value-capturing and less risky partnerships.
Even with the increase of sourcing risks, many companies have continued to manage their sourcing relationships, and effectively reducing the risks as they do so. They have always devised a way to exert control. Companies simply regard their external relations as strategic partners and tightly integrate them with their overseas subsidiaries or domestic operations. In addition to these sourcing safeguards, the company also continually monitors its factories overseas to ensure stable quality management systems. You eliminate the risk of a quality issue by limiting potential problems and acting quickly when one occurs to prevent it from happening again.
3. New local market opportunities.
All a company needs to do as new markets emerge, is to find ways to establish a presence ahead of their competitors. A good start would be by making large-scale offshoring investments in key sectors such as manufacturing and sales. You may also want to partner with key local institutions, government organizations and companies.
4. Move products into market faster, boost innovation.
If you are into consumer products, it is important that your products hit the market ahead of your competitors. This is important in a rapidly changing market.
5. Disruption of traditional business models.
You could decide as a manufacturer to spin-off your contract manufacturing operations, outsourcing everything you have a harder time with, to countries that are more favorable in production and human capital. You stand a great chance of using capability sourcing to grow your business and gain a significant market share.
These formulas have been created and constantly replicated and applied by companies. Sometimes they just build an internal organization to effectively manage partner relationships and transfer the experience gotten from one project into the next. It is therefore, advised that you adopt strategic capability sourcing as a way of possibly making a headway in the competition.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.
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