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The other side of outsourcing
What lies on the other side of the outsourcing boom? All the third-party providers that manage the routine operational activities other companies shed. This lucrative if unglamorous business is growing fast and creating opportunities for both start-up providers and established businesses seeking new growth services to enter. Would-be providers of operational services—call them "infraservice" providers—may find the industry a bit more challenging than it looks.
The take-away: The secret of success? Making the right decisions from the start about where and how to achieve economies of scale and skill. Many providers overestimate the value that can be created by managing another company's operations. Others underestimate the pitfalls presented by infraservices.
Articles provided by The McKinsey Quarterly
© 1992-2003 McKinsey & Company, Inc
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