Posted with the permission of the American Bar Association.
By Emily Stapf and David Burg.
Outsourcing as a concept has existed for over two centuries, as Adam Smith noted when he wrote: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. This concept is increasingly being adopted by businesses headquartered in the United States and is more pronounced in a time of globalization where cheap labor forces with significant technical training are widely available; however, there are implications associated with the process of which attorneys should be cognizant. This article highlights a number of issues of consequence.
Outsourcing business functions or business processes is the conversion from in-house to purchased (or sourced) from a supplier. The perception is that it is advantageous to engage other entities specializing in specific processes to take over that facet of a business. This decision in generally made to gain competitive advantage via cost saving or efficiencies. There may be hidden costs not readily discernable in the form of unanticipated liabilities and risks associated with outsourcing. These costs may be identified, considered, adapted to, and mitigated during due diligence.
Download Outsourcing considerations (64kb).
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