How to Use the Outsourcing Decision Matrix
By Justine Gado | Sep 26, 2019
The outsourcing decision matrix is a strategically designed plan that aims to help business owners, entrepreneurs and decision-makers to figure out their plan before the final decision to outsource.
Now, outsourcing is not something you can decide with overnight. In one way or another, it could make a significant impact on your business. It can assist in freeing up your time to allocate for innovation and other vital tasks that will aid in growing your business. And just like other businesses, there are unprecedented risks to outsourcing. However, with good planning and strategy, those risks can easily be disregarded.
In this blog, we will explain the importance and usage of the outsourcing decision matrix.
How to use the outsourcing decision matrix
There are 3 important steps when using the outsourcing decision matrix.
- Identify the importance of your task
It is important to identify the value of a certain task before deciding to either keep it in-house or choose to outsource. You should know first if that certain task is vital to your company’s competitive advantage.
- Know its contribution to operational performance
Evaluate if this certain task is very much important to your company’s day-to-day operations. Will your operations rapidly decline if it’s done badly?
- Plot your task on the matrix
Now that you’re done evaluating which task goes where you’re more than ready to allocate it on the actual matrix. Doing so will give you a better plan on which to outsource or keep in-house.
- Form a strategic alliance – tasks in this quadrant are strategically important but only contributes a little to operational performance. They are considered to be relatively insignificant of full in-house focus. These tasks can be outsourced.
- Retain – these tasks plays important roles both for successful operational performance and strategic importance. Tasks like these should be kept in-house for maximum control.
- Outsource – these tasks are important for a successful operational performance. However, they are not strategically important. These tasks can safely be outsourced.
- Eliminate – tasks in this quadrant are not at all important to your organisation’s overall strategy nor they make any contribution to the day-to-day operational performance.
Properly using the outsourcing decision matrix can tremendously help your business grow. Each quadrant on the matrix gives you an insight as to whether a task should be outsourced, retained, strategically aligned, or eliminated. It is now up to you on how to execute the matrix.
The outsourcing decision matrix is a good starting point for making decisions about whether or not to outsource tasks in your business. A lot of outsourcing companies especially in the Philippines has used the matrix even once.
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