A sourcing strategy for enhancing core capabilities

Purpose – Most companies focus on using outsourcing to achieve cost cutting. This article urges them instead to consider outsorcings potential for capability enhancement.Design/methodology/approach – Reports on a handful of companies that place outsourcing – onshore or off – in a strategic context.Findings – Leading companies start by analyzing not just where they can outsource to lower costs and improve quality, but which capabilities are vital to their core business.Research limitations/implications – A recent Bain survey of large and medium‐sized companies reports that only 10 percent are highly satisfied with the costs they're saving, and a mere 6 percent are “highly satisfied” with offshore outsourcing overall.Practical implications – Outsourcing has become so sophisticated that even functions like engineering, R&D, manufacturing, and marketing can be moved outside.Originality/value – The authors show that it's no longer a company's ownership of capabilities that matters, but rather its ability to co...