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Too much sub-contracting can damage your health

Sub-contracting can represent a trap for a company, since it carries any number of risks, among them :

- the leaching of skills which are critical for the company : to work efficiently with competent partners, a company often has to share part of its skills. The transfer of skills is particularly dangerous in the case where a sub-contractor also works for your competitors, and is likely to pass on your skills to them ;

- too much concentration on the company's basic activity : in effect, in many businesses which have standardised their approach to sub-contracting, there is a disappearance of creativity and the ability to innovate, which hinders the company's development. The company gets rid of its vital elements. All too often the discoveries, inventions and new products which are the means of important growth come from activities surrounding a company ;

- the continuity of service is an important criteria when selecting sub-contractors : the more you externalise, the less control you have. If your sub-contractor decides to give up the service for which you are paying him because it isn't viable or because he alters his strategy, the smooth functioning of your company runs the risk of foundering, unless you manage to find a new sub-contractor as quickly as possible, or if he takes a while to learn the job ;

- the ability to integrate in the present functioning of the business and to keep abreast of possible changes : your sub-contractors' culture and work methods may be different from your own, but you must find a way of working together.


Internal production

Internal production doesn't necessarily have to represent a greater volume of work than that carried out by sub-contractors : one-person small businesses working with sub-contractors throughout the world will increase in number.

On the other hand, it is always preferable that :

- jobs which could be sub-contracted should take into account strategic information : confidential research and development, sensitive commercial contracts, unique skills ...

- where strategic skills are concerned, the company should stay in control of the skills which represent the added value it has created, and which justify its very existence ;

- The amount of business is sufficient for the internalisation of a function to reduce its price without increasing its fixed costs out of all proportion.

Some services within a company are not satisfactory to its internal clients, and as an incentive to improve the quality of their service, management places them in competition with external services.


 

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If you enjoyed this site, we obviously share values: we have written it in 1999 !

We haven't updated it online as the vision still is more and more relevant: the more the internet matures, the closer it gets to our vision.

We still believe in innovation, creativity, rigour and results control.

Contact us if you need webmarketing services:

Raphael Richard, founder

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