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Outsourcing: Collaboration between INEGI and CARRISBUS illustrates importance of evaluating outsourcing strategies

18 January 2022
Article by Beatriz Ribeiro, Industrial Engineering and Management consultant, and Luiz Rodrigues, trainee consultant at INEGI.

The term outsourcing, in a business context, refers to the subcontracting of a third party to carry out a process or service for the contracting company. This delegation of functions is, as a rule, the result of a strategic decision not to use its own resources for a particular function or extraordinary situation. 

Thus, the contracting company remains devoted to its core activities, that is, those that they are known in the market for, with the remaining activities performed by the contracted entity. In this way, a good application of outsourcing allows the optimization of processes and, consequently, the reduction of costs.

Recognizing this context, CARRISBUS, a company of the CARRIS Group dedicated to the maintenance and repair of heavy vehicles and electric cars, joined the INEGI Industrial Management and Engineering consultancy team in a study to determine the impact of a greater or lesser percentage of outsourcing in the company's future activity.

During its execution, several factors were considered with weight in the decision, from the evolution of human resources teams, to emerging technologies related to the vehicles themselves that require greater technical expertise (for example, greater predominance of electric and natural gas vehicles).

Outsourcing: what you should know about advantages and disadvantages

The transport sector is one of the business lines that frequently resort to subcontracting, particularly in the area of ​​maintenance. The management and maintenance of large fleets is a particularly complex activity, and both the internalization and the subcontracting (outsourcing) of these activities must consider the dimensions of the fleet, the infrastructure and the availability of human and financial resources.

The exclusively in-house approach relies on more experienced teams with greater flexibility to optimize processes and test possible solutions, also in-house. Furthermore, while this option requires investment in infrastructure and training of human resources, it also increases visibility into operational costs.

On the other hand, outsourcing can result in a decrease in operating costs, or at least in a lower variability and an alignment of the suppliers' teams with the latest specifications and technologies. However, it opens the way for external dependence, which can lead to a reduction in control over processes and a loss of opportunity to expand internal knowledge.

Step by step towards a successful strategy

The investiment on any of the strategies will depend on the variables in the equation. In the current reality, the most considered option is a joint approach, emphasizing core services, but guaranteeing the execution of complementary services.

The final decision must go through an analysis of future needs and competences, in order to enable the calculation and comparison of associated costs. In this regard, the following essential steps must be included:
  1. Review the company's strategy to identify competitive advantages, defining in detail which key competencies and support or supplementary processes could be outsourced.
  2. Calculate costs associated with the activities to be developed through the evaluation of the cost/benefit ratio, considering the service levels to be achieved as well as the costs necessary to support them.
  3. Select activities to be subcontracted, choosing the best supplier, the type of relationship to maintain and performance analysis indicators that will allow controlling the services provided.
  4. Define a transition plan for outsourced activities, contemplating the integration with the company's current processes and information systems.
  5. Analyze performance in order to identify deviations and corrective measures to minimize them.

Finally, it is important to point out that, despite the operational and financial advantages it can provide, outsourcing is not guaranteed to be the solution to adopt in any case. Before making a decision, it is essential to carry out an assessment of the benefits and possible returns, along with the risks and possible long-term disadvantages. And on the way to conscious resolution, you can always count on the INEGI's consulting team.
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