Knowledge Management Systems - INF 385Q    [download PDF]


The decision on whether or not an organization should outsource a part of their business is a complicated one, and should not be taken lightly. Searching for short-term cost savings is not a bad idea, but choosing outsourcing based solely on cost reduction or tactical problems is a short-term solution and will undermine a company's potential for long term success. The organization should have sufficient management skills and the ability to adapt new behaviors and processes to successfully manage an external part of their business. These skills should include knowledge management abilities and a willingness to apply them to a new and more challenging situation. Tacit knowledge must specifically be considered when planning an outsourcing strategy, particularly if the component of the business to be outsourced already exists internally and valuable institutional knowledge will be lost. The transfer of tacit knowledge can have a profound effect on quality and overall strategic business value. Cultural and language barriers add challenges to the already difficult process of transferring tacit knowledge and are of particular concern in cases of cross-border outsourcing. Finally, once a decision has been made to outsource aspects of a business, specific knowledge management strategies can be implemented that will maximize the benefits that are available from a decentralized business model.

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