Contract terms altered after power shift in processes


Companies specify the qualities they want and work
alongside providers to get that quality

Constant monitoring in real time

Captive center

Project teams with two leaders, one of whom is the
employee of the buyer’s company

Joint venture

The future of outsourcing
o
After outsourcing manufacturing and simple service jobs, knowledge-
based services have also been outsourced

Blueprints, X-rays

Product and process development
o
For security reason, crucial R&D most likely to stay in-house
o
For practical reasons, face-to-face contact with customer will keep some
jobs here
o
In manufacturing:

Differentiated manufacturing

Technology edge

Value-added services

Premium positioning

SUMMARY
o
Outsourcing/offshoring decision should involve these key parameters

Cost (short term and long term)

Risk (short and long)

Upside potential (short and long)

Tradeoffs