The Outsourcing Decision: A Strategic Framework

Abstract

Firms as diverse as Sun Microsystems, IBM, Mattel, Boeing and Calvin Klein all engage in extensive outsourcing. Sun, for example, currently purchases around 75 per cent of its components from external suppliers (Domberger, 1999). Estimates currently put the market value of outsourcing in the United States (US) at between US$200 and US$300 billion (Dun and Bradstreet, 2000). As outsourcing continues to grow in importance, its nature and focus is evolving. Historically, most outsourcing took place in manufacturing industries, but it is now spreading rapidly within service industries. It is also becoming increasingly cross-national and global: for example, it is estimated that only approximately 40 per cent of the production value of a North American-made automobile now comes from the US, and much of this offshore supply is outsourced.

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