Outsourcing technical services: Stages of development

This article is based on an investigation of the development of two service functions, software development and engineering, in the automobile industry. The inquiry revealed the importance of 'learning and leverage', and the need for a successful combination of functional and application capabilities to achieve to competitive advantage. The study describes the evolution in the development of service functions. This has involved a gradual move from in-house development to a more autonomous status in which external clients also play a role. This often leads to the closure of the in-house unit, and in the final stage the service supplier offers a package of related services.