So why outsource? The answer essentially depends on the relative ability of your organisation versus that of an outsourcer to drive and sustain change.

Outsourcers have no access to a magic formula, despite the intoxicating incantations that emanate from their sales pitches. However, they can perhaps act as a ‘magic ingredient’, a catalyst, which when combined with the client’s skills, experience and drive, can produce sustainable results. They don’t necessarily offer a short cut to success or a low-cost route, but they can offer a way to make change happen and to sustain the benefits, which would not have been possible without them.

But when should you take advantage of this, and how can you be sure that the result will be real and not ‘fool’s gold’?

Essentially, organisations should consider outsourcing when any of the following is the case:

The question to ask is: “What can an outsourcer help me achieve which I could not do by myself?”

The answer is partly linked to skills, systems and resources which the outsourcer has access to, and perhaps around financial engineering to spread the cost or match it to demand. However, it may also be around the disciplines and changes imposed by the outsourcing process itself. A deal which involves contracting out a business function, with all the people, commercial and solution risks entailed, always has CEO involvement and commitment in a way that an initiative to improve operations internally may not. The process of signing a contract, which includes clear obligations on both sides, can help drive and sustain change. The fact that real money can leak from the organisation if client obligations are not met helps to ensure that the wider management community changes its behaviour and helps make the contract work.

In short, making the same change using outsourcing rather than an in-house initiative can make the change more likely to happen, more likely to succeed, and more likely to be sustained, simply because of the process of outsourcing. So is it a sign of weakness to outsource, recognition that you could not have done it yourself? Evidence would suggest not – some of the world’s best-managed corporations, led in the early ‘90s by BP, have used the outsourcing of back office functions as a strategic tool, which has contributed to their success. But this is not to say that it is always the best approach – it is one tool available to management, and only a thorough analysis of an organisation’s unique situation can determine whether it is the right one.

So perhaps there is some magic there – not necessarily in skills and systems and resources, but in the way that outsourcing can change culture and behaviours. And as people make things happen, that is worth thinking about.