5 Successful Stories of Outsourcing
Companies that successfully create and sustain value year after year are rare. Life shows, that a single decision can create the history of success or bury the whole business alive.
Today, I would like to share with you 5 success stories. They are all about one single decision made, that has changed everything. 5 stories of winning business and 5 reasons to outsource.
Story #1: Procter & Gamble Product companies, such as P&G, have a big challenge performing in a very rapidly changing market. It is critical to bring out a new product ahead of many competitors. So one day, after decades of product race, P&G made a decision to outsource some R&D activities. The result exceeded all the expectations. Outsourcing boosted its innovation productivity by 60% and generated more than $10 billion in revenue from over 400 new products. Today, about half of P&G’s innovation comes from external collaboration.
Story #2: Unilever
While growing, transnational companies face dramatic operational problems. Well-known consumer products giant Unilever Europe, over the years, had expanded by country and division. As a result, different business groups and geographies operating across 24 countries were all using multiple ERP systems. In 2005 its leadership team made a strategic decision to integrate the company’s multiple business units into a single, and create one ERP system across Europe. Not being a specialist in IT solutions, the company outsourced the development of ERP system to external party. As a result, these improvements have directly contributed to the € 700 million annual savings on operational activities.
Story #3 Mark McRae and his 30 companies
Here’s the story you probably haven’t heard of. Mark McRae is one of the Sunshine Coast entrepreneurs in Australia. He has successfully managed and own multiple businesses that is more than 30 companies! Having a wife and three children, he was still able to hire 1,300 people and generated $280 million in online and offline sales for his businesses. He says, that his secret is outsourcing. Mr. McRae wasn’t afraid to outsource to various countries, such as Malaysia, the Philippines, South Africa, the USA, and India. As a result, he enjoyed the benefits of working with global talents.
“Outsourcing can give you access to a dizzying array of highly skilled professionals from all over the world. For example, to produce a professional documentary, I hired a script writer in the USA, film crew from Canada, post-production team in Croatia and editor in Serbia.”
– Mark McRae.
Story #4 Acer
Acer, the Taiwan-based personal computer maker, has used capability sourcing to make itself into the world’s second-largest PC manufacturer. Since the spin-off of its contract manufacturing operations in 2000, the company has made a big step ahead its competitors. The Acer executives knew it was good at branding and marketing and chose to outsource everything company had a harder time with, like manufacturing. The move led Acer to faster-growing sales and gains in market share. The company now maintains a strikingly lean and flexible operation. Its 6,800 employees represent a workforce less than a tenth the size of its largest competitor.
Story #5 JM Family Enterprises
JM Family Enterprises is a diversified automotive corporation whose principal businesses focus on vehicle distribution and processing; financial services and technology products. The company outsourced all mainframe hardware, software and operations because once mainframe usage leveled off at $8.2 billion. The outsourcing vendor immediately optimized operations so that critical month-end financial reports landed on the desks of JM Family executives on time. What hadn’t happened before.