Sunday, August 26, 2018

Time to in-source they key operations

We are used to outsourcing that we do not realize its disadvantages. It took a visionary business leader to try the opposite approach.

When Genting Group wanted to build the $1 billion cruise ship Genting Dream, the CEO decided to buy the to buy the German shipyard.

This in-sourcing approach allowed him to have direct control over the design of the ship. He does not have to pay expensive variation charges. He does not have to worry about quality control - he has direct access to the detailed statistics.

He took over all the staff of the shipyard and have direct control over them. He saved the cost of contract management at the top level, although his management still has to handle the management of the sub contractors.

It is quite common among the government agencies to outsource their responsibility and to let the main contractor take over this task. It will end up with a higher bill and questionable quality.

It is time to re-think of what can be outsourced and what has to be in-sourced.

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