Outsourcing in Strategic Management Accounting

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This research will begin with the statement that the concept of migrating internal business processes or functions to an outside organization may seem quite appealing on the surface. Reducing internal resource constraints and corporate expenditures and increasing quality may make service providers a potent draw. Today more types of services are available than ever before. Among other things, we can choose to outsource our network infrastructure, e-mail services, Web applications, and collaboration activities. Over the last decade, the attitude of businesses toward outsourcing has undergone a change of opinion reflecting the need to compete globally and focus on core competencies. Most processes have traditionally been kept in-house where it was thought they could be controlled most effectively. For many companies, an outsourcing decision represents the longest and largest financial commitment the company will make. The selection of an outsourcing partner will directly affect the company’s growth and future performance. In short, the outsourcing decision is critical to the company’s future success. However, without careful planning and preparation, our outsourcing project can easily result in lost revenue, added expenses, and, potentially, litigation. In order to reach efficiency that believed can obviate company from bankruptcy, a lot of method and concept are have been developed. One of them is by doing outsourcing. However, besides promising many strategic benefits, it also brings consequence of the appearance of strategic risk. The growth of outsourcing over the last century has been driven by the ever-expanding quest to improve productivity, reduce costs, and deliver greater value to customers and shareholders. Outsourcing decision is taken by all managed to improve their company performance that is related to process business, which is not representing core competence or core business. Expected by “delivering” the management process to other company (as a business partner), which is owning core business in the area, process with the optimal performance will be created.