Unlocking the synergic interaction between outsourcing, competitive advantage and organizational productivity: A conceptual review

Abstract

The current business climate has necessitated the development of cutting-edge competitive business strategies that will keep organisations ahead of their competitors while minimising costs. As a result, most businesses tend to outsource non-core production lines and activities to third-party firms. While non-core activities and services are outsourced, organisations are better positioned to focus on their core competencies while expending the fewest resources and costs, ensuring efficiency. The primary goal of this research is to conceptually examine the relationship between outsourcing, competitive advantage, and organisational productivity. The library research method of using secondary sources of data was used in this study. A review of empirical literature and analysis revealed that, while outsourcing can provide a competitive advantage in terms of productivity, as well as opportunities for professionalisation, specialisation, and skill development, it also has some drawbacks, such as organisational espionage, which can be a stumbling block in the productivity wheel. As a result, while there is unquantifiable synergy between outsourcing, competitive advantage, and productivity, organisations should be thorough and circumspect in considering those activities and services that will be outsourced as they choose credible and trustworthy vendors and partners.

Keywords: Competitive advantage, outsourcing, productivity, vendor, offshoring