When faced with a dysfunctional business process, organizations need to address the "fix or ship" question: fix the issues before sending it out to a vendor, or ship it out and have the vendor fix them? There is no universal right answer, but looking at the general pros and cons of each approach will help organizations come to the right conclusion for their specific situation.
Benefits of Fixing First, then Moving to a Vendor. The benefits of fixing a function before moving to outsource include (1) early realization of the perks from the change implementation/reengineering; (2) reducing the transition risk; and (3) better capability to estimate the effort/scope of outsourcing required, as well as the potential for improved service levels. Another possible benefit is that you may learn you can get a better result by only outsourcing certain components, rather than the entire department, thus getting a better return on investment.