Services outsourcing: marketing strategy and the internal competitor

As corporations look to concentrate on core competencies, the likelihood of outsourcing various business services increases. The outsourcing phenomenon represents a significant market opportunity for suppliers of business services. However; the outside supplier often finds that his major competitor, the internal service provider, is part of the outsourcing evaluation team. Furthermore, the internal provider may have significant influence in his/her role as the inhouse functional expert. This study investigates the viewpoint of the inhouse provider vis-à-vis outside suppliers in the context of warehousing, a pure business service. The study finds that outsourcing does not take place where the inhouse expert perceives a wide gap between internal and external service capabilities.