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 LATEST NEWS |
October 13.2008
Treasury Hires Investment Adviser Under the Emergency Economic Stabilization Act |
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October 13.2008
Plenary Remarks by Assistant Secretary for International Affairs Clay Lowery at the Annual International Monetary Fund and World Bank Meetings |
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October 13.2008
The global financial crisis has yet to peak, and individual governments must now take appropriate measures to deal with its effects, Russia's finance minster said. |
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October 12.2008
Recent U.S. Actions to Halt Iran�s Procurement Practices for Attempted Acquisition of WMD-Related Items |
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October 12.2008
Treasury Designates FARC International Commission Members |
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October 12.2008
Statement by Secretary Henry M. Paulson, Jr. at the Development Committee Meeting |
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October 12.2008
One-in-Five Speak Spanish In Four States New Census Bureau Data Show How America Lives |
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October 12.2008
Una de Cada Cinco Personas Habla Español en Cuatro Estados Nuevos Datos de la Oficina del Censo Muestran Cómo Viven los Estados Unidos |
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October 12.2008
Capital Expenditures Rise 14 Percent to Record High in 2006 |
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October 12.2008
Nation’s Housing Stock Reaches 128 Million |
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October 12.2008
Federal Spending Increased 4.4 Percent in 2007 |
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October 12.2008
Investment Banks Struggle to Adapt |
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TERMS / How can outsourcing provide cost savings? What are the benefits and possible risks?There is no mystery in the suppliers’ advantage – they have scale that allows them to use shared service centers, and processes and automation tools that enable them to be more productive. Not all situations are the same. The extent of savings requires a careful analysis of the customer’s environment and matching the customer’s needs with the supplier’s capabilities. The advantages of outsourcing typically include not only cost savings, but also improved processes, ready access to more skills, and pricing that more rapidly scales up and down with demand.
The principal risks in outsourcing arise from the changes that can occur during the life of the contract. These contracts are typically 5 to 10 years long. There are host of changes that can and will occur in that time period, including changes in the customer’s markets and corresponding business needs, changes in the customer’s business structure (such as acquisitions, divestitures and joint ventures), changes in laws, changes in technology, and changes in cost. Add to that the risk that the customer could be at an information and power deficit compared to the supplier given the supplier’s control of resources, third party contracts, and cost information. The contractual arrangement has to be carefully structured to managed these risks.
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