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The Contracting OrganizationA Strategic Guide to Outsourcing$
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Simon Domberger

Print publication date: 1998

Print ISBN-13: 9780198774570

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198774575.001.0001

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The Benefits of Contracting

The Benefits of Contracting

(p.33) 3 The Benefits of Contracting
The Contracting Organization

Simon Domberger

Oxford University Press

This chapter and the next outline the benefits and costs of contracting out. While there is merit in separating costs from benefits, and that is how managers intuitively think of the issue, the separation is not always easily achieved, and many of the concepts raised under the heading of benefits also appear under the guise of costs. Hence, costs and benefits become two sides of the same coin, which may not be particularly helpful as a framework for decision‐making. Aspects of the benefits of contracting out are addressed in this chapter by looking at the structure of production, core activities and core competencies, the force of competition, competition and quality, the discipline of the market, and flexibility. The benefits of contracting out are summarized as specialization, market discipline, flexibility, and cost savings.

Keywords:   competition, contracting out, cost–benefit analysis, cost savings, flexibility, market discipline, outsourcing, specialization

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