Sourcing: new face to economies of scale and the emergence of new organizational forms

Abstract

This paper provides an overview of the thinking behind strategic sourcing and highlights an emerging trend development, namely the centralization of shared services. In so doing, a model highlighting the likely future developments of sourcing is proposed, emphasizing why sourcing should be viewed from a strategic perspective. The paper invokes conceptual knowledge, practical case studies and research in its pursuit to shed light on the increasingly complex and sophisticated forms of sourcing to be found in today's organizations. It draws on both management theory concepts in understanding new organizational forms, exemplified by ‘sourced service consortia’ organizations and economic analysis in understanding contracting, markets and the nature of corporations. The benefits and costs of outsourcing are also explored, as well as the conditions for effective new sourcing arrangements. In the concluding section, a scenario for the future of outsourcing is presented. Copyright © 2000 John Wiley & Sons, Ltd.

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