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strongest in particular areas. Companies need to decide whether to partner with the best of breed in each, or to perhaps compromise and choose the one-stop shop that gives the best balance and is most likely to achieve integration across different marketing activities -this would arguably be the new media agency or perhaps a traditional marketing agency that has an established new media division. Which approach do you think is best?

Observation of the practice of outsourcing suggests that two conflicting patterns are evident:

1 Outside-in. A company starts an e-business initiative by outsourcing some activities where there is insufficient in-house expertise. These may be areas such as strategy or online promotion. The company then builds up skills internally to manage these areas as e-business becomes an important contributor to the business. The company initially partnered with a new media agency to offer online services, but once the online contribution to sales exceeded 20% the management of e-commerce was taken inside. The new media agency was, however, retained for strategy guidance. An out side-in approach will probably be driven by the need to reduce the costs of outsourcing, poor delivery of services by the supplier or simply a need to concentrate a strategic core resource in-house. 2 Inside-out. A company starts to implement e-business using existing resources within the IT department and marketing department in conjunction with recruitment of new media staff. They may then find that there are problems in developing a site that meets customers' needs or in building traffic to the site. At this point they may turn to outsourcing to solve the problems.

These approaches are not mutually exclusive, and an outside-in approach may be used for some e-commerce functions such as content development while an inside-out approach is used for other functions such as site promotion. It can also be suggested that these approaches are not planned - they are simply a response to prevailing conditions. However, in order to cost e-business and manage it as a strategic asset it can be argued that the e-business manager should have a long-term picture of which functions to outsource and when to bring them in-house.

Understanding Outsourcing

Understanding Outsourcing

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