Integrating Whole Life Costing In Outsourcing Management- The Case Of Gsa

Unlike the simple procurement of good or services, decisions to outsource results from a management choice to rely on another company. A company that will assume risks and take management responsibility for the requested service. This choice may result in a long-term, mutually-beneficial relationship between the two companies. Outsourcing has grabbed headlines, it is proclaimed as a necessary, effective, and inevitable strategy to reduce costs, focus on the core business, maintain competitiveness, and obtain needed capabilities. Even though the idea of outsourcing is to achieve the optimal performance within a company and a supply chain. Outsourcing decisions, therefore, require life cycle analysis of anticipated changes concerning all relevant costs, including indirect ones, to avoid undesired surprises. GSA (Groupement SONATRACH AGIP) like many companies in the oil and gas industry uses outsourcing broadly across many activities, but devoid of a clear procedures and strategies to monitor and control the outsourcing operations. A review of literature has been undertaken to identify key elements of outsourcing management, how outsourcing decisions are made, and most importantly, how the company can be more successful in achieving their goals for outsourcing. Then, a survey questionnaire has been driven to understand how practical process works within the company. From the results of the survey, it has been revealed that decisions are rarely made within a long-term perspective, and cost consciousness within the company is often quite poor; whereas, Life Cycle Costing has good alignment with outsourcing objectives and it is a potential tool for outsourcing decision making. The barriers to progress on the company where identified, and a best practice outsourcing management model is presented and described on how it can be used to achieve superior results .Besides, an evidence has been shown on how crucial is life cycle costing on outsourcing decision making .Recommendations for further studies based on contract management , cost management and cost information are finally proposed.