Outsourcing in Mnc

Contract Services

Outsourcing Xbox Manufacturing

Microsoft Shows the Way for Successful Outsourcing Relationships

Heather B. Hayes

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Partnering with outside contractors can be more effective in the twenty-first century, no matter what the industry or product.

Heather B. Hayes is a freelance writer for PharmSource Information Services, Inc., tel. 703.914. 1203, fax 703.914.1205, info@pharmsource.com, www.pharmsource.com.

ophisticated and effective outsourcing relationships are becoming more typical in every industry. Many of the world’s leading companies such as Microsoft Corporation (Redmond, WA) and Dell Computer Corporation (Round Rock, TX) have embraced outsourcing and harnessed the expertise and capabilities of their outsourcing partners for their own success. As pharmaceutical companies confront challenges that are undermining their vertically integrated structures, they can benefit by examining how top players in the global economy have achieved outsourcing success. At first glance, Microsoft’s recent foray into the electronic games market appears unrelated to developing and producing drugs and medical devices. Yet the case of Microsoft’s Xbox electronic game product has a lot in common with the launch of a new drug—the company must integrate the contract manufacturer into the project at an early stage of development and manage a sophisticated supply chain. The company also must manufacture and distribute globally, ramp up production as product acceptance takes hold, and ensure market supply. Finally, it must achieve very high levels of product quality and dependability. Microsoft’s decision to outsource the Xbox manufacturing illustrates just how sophisticated and effective partnering with outside contractors can be in the twenty-first century, no matter what the industry or product. Microsoft achieved the position of world leader in software development by

relying on no one but itself. But when Microsoft officials decided that they had a...