Time to Outsource Non-Core Competencies?

At a recent NASSCOM (premier organization that represents and sets the tone for public policy for the Indian software industry) keynote John Chambers quoted Jack Welch, “You’ll never have a great company until you have a near-death experience.”  If that holds true today, then we have a number of great companies that are going to rise out of the ashes of 2009.What will differentiate many of these companies may be their ability to focus on their core competency and grow market share by outsourcing business processes instead of waiting for credit markets to open up for internal investments. Can’t finance a new ERP system? Why not consider outsourcing tactical procurement and source-to-pay functions? If you can’t borrow money, the outsourcing market is waiting to take these processes in-house and do them for you. What isn’t clear is whether these outsourced jobs will be off-shore or on-shore. With the large number of mothballed professionals, there may be some customers and suppliers likely to create new, captive U.S. entities to operate outsourced functions and take advantage of increasing idle domestic labor pools.Another quick hit many companies may consider is the use of Group Purchasing Organizations. Why not spend time on critical categories and hand over indirect categories to an organization with category managers who will watch the markets and flex their leveraging capabilities on your behalf?Near death may be scary for some and exciting for others. Is the glass half full or empty in your perspective?