Smartsourcing: Just What It Sounds Like

Ann All

The initial furor over cost savings created by offshoring is dying down as companies are finding that the savings aren't as big as they may have seemed -- due to a need for more management, foreign travel, etc.

But that hasn't dampened enthusiasm for offshoring, largely because companies find that the cost savings pale in comparison to the longer-term, strategic benefits that can result from a successful relationship.

There's even a newly minted term for this practice: smartsourcing. It's the subject of the new book, "Smartsourcing: Driving Innovation and Growth Through Outsourcing" by Delphi Group executives Carl Frappaolo and Thomas Koulopoulos.

An early adherent of smartsourcing was General Electric which, under Jack Welch, took the then-radical step of sending not just menial tasks but R&D work to India.

Of course, there's a catch. Smartsourcing is far from simple.

It will work best for companies that have a deep insight into their business processes. Selecting the right partner becomes even more important, for obvious reasons. And companies must be willing to share proprietary information with their partners; many companies are not ready for a relationship that open.

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