Many companies outsource the wrong processes to the wrong vendors in deals that are structured poorly. The resulting chaos and rancor that now typifies much of the IT-outsourcing market is a clear indication of need for a simple, but rigorous, framework to provide practical guidance.

Basically, making the right outsourcing decisions requires answering three questions:

• What will we outsource?
• To whom will we outsource?
• How will we structure the outsourcing deal?

Answering these questions correctly can transform outsourcing into what you want it to be: a powerful component of your firm's overall competitive strategy. Outsource correctly, and you position your company to spring strategic surprises that will defeat your competitors and delight your investors. Get it wrong, and prepare for declining market share, decreasing margins and a falling stock price.

The study attached below describes a framework called "value chain dynamics" to help you resolve outsourcing issues. Implemented properly, value chain dynamics ensures that your outsourcing contributes directly to a firm's sustained competitiveness and to its ability to create and maintain shareholder value.