A Critical Assessment of Outsourcing in the Oil & Gas Industry

Abstract

Outsourcing is a well-debated phenomenon and it seems there is a quite common opinion for a company to be successful; it has to follow the trend of outsourcing. Outsourcing is something most industries practice, and certainly the petroleum industry. As the oil & gas industry established, it seems the frequency of outsourcing has matured along with it. This study has primarily been based on scientific articles concerning outsourcing in the petroleum industry. Experiences and findings from these articles have been presented and discussed, but also compared with similar approach in other industries. From the findings it is indicated that outsourcing in the oil and gas sector is well established, not just within core competencies (which activities are defined as core competences can also vary within the industry), but also within supportive activities. The oil companies are constantly searching for strategies for a sustainable business that is less vulnerable to external influencing parameters such as oil price and production. Outsourcing can be a smart way and a pronounced tool to achieve more stability in the long term. Outsourcing is used as a formidable strategy to exert efficiency in operations and stay ahead of competition. The report concluded by asserting the importance of outsourcing as a prelude to higher performing enterprises in this sector. It recommends that the practice should be done within the acceptable frameworks such as allowing competitive bidding, outsourcing from credible providers, auditing the business processes, and benchmarking with other firms in the industry and beyond.