The O-Word

Let’s talk about the O-word.

The word that raises eyebrows in some circles, but benefits those who know how to use it. Outsourcing.

Outsourcing and specialization have a cozy relationship. One where the more you specialize, the greater the gains from outsourcing. This gives you expedited timelines, flexibility and greater market share.

So why outsource?

Simple. Because outsourcing allows you to specialize in niche areas. And specialization increases your efficiency, quality of goods, and returns.

Outsourcing = Specialization = $$$

You probably already specialize and just don’t know it

Does your company invent, design, engineer and manufacture all in-house? Most likely not. The logistics and costs of handling every stage of the process can be a nightmare. Especially when your company focuses on filling a specific need in the oil and gas industry.

The specialization business model dictates that oil companies should limit themselves to a small number of core fields [within] which they can add value by applying specialized technology. So far, the stock market has rewarded companies that have done so, such as Seven Generations Energy in Canada and Diamondback Energy in the United States.”

– Adam Waterous on Specilization in Oil and Gas

To specialize in oil and gas (which most of us do) you need to find people trained in your niche field. This allows you to provide the best-of-the-best goods and services, all while focusing on what matters. But to specialize, you need to concentrate your efforts into what you do best.

So how can you specialize when you have a million other things to do?

By outsourcing.

You shouldn’t be getting grey over how to engineer and design your rigs on your own. Nor should you be pulling your hair over managing every aspect of your large projects. Instead, as a drilling contractor, you should focus your energy on delivering safe and efficient solutions.

Sub-sectors in Oil Gas encourage specilization and outsourcing
Oil and Gas Sub-sectors

In effect, this is what the Oil and Gas industry has become. It has turned the huge process of getting oil and gas out into thousands of efficient specializations.

Outsourcing Speeds Business

This throws back to Adam Smith’s (Father of Modern Day Capitalism) theory of division of labor. Meaning, to really be efficient and target your niche, you need to take large jobs (building a drilling rig) and subdivide it into small, specialized tasks.

That’s where outsourcing comes into play.

Time = $$

Outsourcing, or collaborative partnering, allows you to focus on what you’re good at while meeting budgets and timelines. Outsourcing firms specialize in orchestrating the entire project. From concept and design to completed rig, collaborative partners have their strategic niche in oil and gas.

Flexibility and Market Share

Small project or large project?

Different project scopes require different personnel, team members and planning.  But in challenging economic environments, you often need to be flexible in the type and scope of work you take on. If you aren’t able to adapt, you’re going to fall behind competitors who can.

So what’s the best way to stay competitive?

We’re beginning to sound like a broken record here, but the answer is: Outsourcing.

Because outsourcing firms specialize in managing projects, they have the talented and qualified experts on hand for any size or scope of project. More, they have a deep breadth of industry experience and knowledge. This gives them insight into different market entries and opportunities.

So while competitors may be lying low, waiting for the perfect project to come along, you can jump on more projects. This will grow your market share, experience, and scope of expertise. All while securing and strengthening your niche spot in the oil and gas industry.

Wrapping it All Up

Everyone is capable of performing tasks themselves. Whether that be engineering, project management or fabrication, most of us can pull the resources together to get the job done. But getting the job done and doing a job well are two entirely different things. Take a look at outsourcing your engineering, design, project management or manufacturing needs with us at DrillGear.

 

 

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