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Professional Services and Outsourcing

So how does this entire discussion of Coase's theory relate to my favorite topic—professional services at a product company? Currently, professional services is one of the rare functions that product companies can't outsource. Product companies may partner heavily in this space with outside system integrators, but that's not true outsourcing. If a product company determines that they need a professional services capability within the company umbrella, the only option currently available is to "make" that capability. This means hiring the management team to manage it, staffing delivery personal, implementing business processes, and investing in IT infrastructure. Unfortunately, many product companies struggle to manage this capability. Which presents a real dilemma for product companies that are being pressured by customers to provide "consulting services and turnkey solutions." As a product company, you don't have the option to easily buy this capability. If you decide to build it, you're just as likely to lose money as make it. And if you do nothing, you risk losing customers to competitors who can provide complete solutions. Not a pretty state.

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