For the last one decade, outsourcing is primarily used as a stop gap approach for cutting costs, accessing new skills and competencies primarily to achieve financial flexibility. But, outsourcing delivers strategic value if it is used to drive radical change for innovation and global transformation of the enterprise. Outsourcing value drivers:

• To launch and scale rapidly to get an innovative new products or services or business model to market first, set an industry standard or to take direct confrontation with the entrenched leaders. For the past one decade, I practiced this model more rigorously to innovate on disruptive technologies and products and bring them to market quickly. It is not about just cutting costs. Outsourcing is more strategic than tactical. It is partnership between two strategic partners to deliver value both on short term as well long term to meet the company’s strategic initiatives.
• Outsourcing also helps in removing constraints to breakthrough growth. Outsourcing can be used to turnaround the under-performing functions and processes.
• Outsourcing is not just about moving back office functions to outsourcing provider to cut costs, service quality, productivity,and focus on core competencies.Instead outsourcing should be used as strategic intent to clearly communicate organizational value creation process – creating the core value within the organization(core competencies) and outsourcing the competencies.
• Outsourcing is the one effective way to replace or renovate critical processes and functions.
• Reposition the firm i.e. to move the firm rapidly to a better competitive situation or accelerate the performance improvement. Companies using outsourcing to reposition them normally focus on short term goals of first getting there and think what happens next.