What is off-limits because it is core to the business?
This is a complex question. Some companies see almost nothing as off-limits. Bayer AG, the German drug giant, has even outsourced about 30% of an area that could make or break the company: its long-term research-and-development efforts. Throughout the pharmaceutical industry, some 20% of drug development is now outsourced, and research firm Frost & Sullivan predicts that by 2004 nearly 42% of all pharmaceutical drug development expenditures (US$38.4bn) will be spent on outsourcing to alliance partners. Still, companies can make mistakes if they evaluate corporate capabilities individually and don’t consider how much one process or department affects another. As Wall Street firms evaluated IT outsourcing, they saw that they would get clear efficiencies, but they also realised that they could not view those efficiencies in isolation, and that the people who design their complex financial instruments would lose some agility. Because these firms depend so much on their ability to quickly d
