Appeal of outsourcing grows as competition intensifies

One of the most widely discussed and misunderstood strategies for chief executives is the decision to outsource certain functions. A company that has been downsized to achieve economies of scale can use outsourcing to fulfill functions that were once done in-house, reducing costs and improving turnaround times. Growing companies can also use outsourcing to more easily absorb additional business and to enter new markets. In the insurance industry, more opportunities to outsource will emerge as vendors develop more products to serve the industry. Insurance companies are moving toward a cycle of constant improvement in the quality and number of services offered to consumers. A well-conceived outsourcing strategy can increase control and effectiveness, enhance operations, reduce costs, and improve customer service. The different forms of outsourcing and their benefits are discussed.