Is outsourcing really offering you a competitive advantage?

Outsourcing

I recently saw a topic post on LinkedIn promoting "Outsourcing as your competitive advantage" which got me questioning the validity of the statement. Before I proceed too far into this article let me offer a warning to those looking for a non-outsourcing solution to their problems or a lengthy rebuttal on the ineffectiveness of outsourcing. Sadly this article is not going to the the silver bullet for which you have been searching. In fact quite the opposite. 

Outsourcing, many years ago, was a strong competitive advantage for those companies "in the know". They had access to ridiculously low pricing when their competitors were paying premium dollar. This is back in a time when outsourcing was a relatively new phenomenon and finding service providers to outsource your activities to was a difficult and often unsurmountable task. Outsourcing is now such a mainstream activity that I would argue, if your sole competitive advantage is your claim to be able to outsource a particular function or product, you may need to start digging a little deeper to truly stand out from the crowd. 

From my consideration, a competitive advantage stops being so once the majority of your competitors have adopted the same practice. You all return back to a level playing field and need to find other way to distinguish yourselves.

Consider Apple's first iPad back in 2010. They marketed the device on the touchscreen user interface and usability. Something you could use as a computer but hold in your hand (for a short while considering the initial weight). Having a personal computing device that did not need mouse or keyboard peripherals was a major competitive advantage for Apple. They were not actually the first to produce such a device but they were the first to thrust the technology into the mainstream. Three years later, there may be feature that members of the purchasing public find as preferred in Apple devices, but having a touchscreen no longer belongs in this category. It is now an expected feature, not only in Apple devices but also across a myriad of platforms. Having a touchscreen is no longer a competitive advantage. Conversely, NOT having a touchscreen is now often a serious disadvantage to the market of your product.

The same applies to outsourcing. Getting your costs down by outsourcing non-essential tasks is an expected activity in most industries (unless the industry is subject to a local buy clause imposed on their customers or the cost of their products is not a consideration in the purchasing decision). The level of competency you display in undertaking the outsourcing tasks offers some competitive advantage but just simply considering the fact that you outsource as a source of advantage is not a sound business thought. 


Brian Le Mon

Principal at EQP Optimsation Solutions

A lot of pondering and analysis of my work history brought me to the realisation that, in essence, the key to building and running a sustainable business can be distilled down into 3 main factors: EFFICIENCY, QUALITY and PROFITABILITY. As a result EQP Optimisation Solutions was born. Contact me directly on 0433 687 545 for a confidential discussion to discuss business mentoring or consulting solutions and how we can EQUIP your business for a profitable and sustainable future.

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Yazmin Barajas

Yazmin Barajas ,

Well actually it depends, but almost all of the businesses are being more competitive when they outsource. I think the problem here is when and what to outsource in order to gain more competitive advantage. Offshore outsourcing can help your business to be more efficient and to be more successful. Outsourcing can give you edge and right help in order to overcome problems like expenses and costs etc. It can also save you time and effort.Yazmin Barajas, Offshore MarketingOBP Australian Offshore Services Outsourcing