Outsourcing Presentation - New Jersey Technology Council Webinar


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Presentation by DATA Inc's CTO Michelle Mitra on current trends in IT Outsourcing globally.

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Outsourcing Presentation - New Jersey Technology Council Webinar

  1. 1. 72 Summit Ave Montvale, New Jersey Phone : (201) 802 9800 http://www.datainc.biz
  2. 2. Outsourcing
  3. 3. Outsourcing Overview Overview – Transfer Management /Execution of a business function to an external Vendor Drivers – Cost Savings (Labor Arbitrage) – Focus on Core Business – Cost Restructuring (Fixed to Variable) – Better Access and Utilization of Knowledge/Experience/Talent – Access to Operational Best Practices – Transfer risk of excess capacity to Vendor – Use external knowledge to enhance in-house innovation – Reduce Time-to-Market – Risk Management (Mitigate risks with outsourcing partner) Process – Strategic Decision to Outsource – Select Vendor (RFP, Negotiation, Contract) – Transition (Staff Transfer, Service Take-on) – Transform (Execute Projects, Implement SLA, Reduce Total Cost of Ownership) – Ongoing Service Delivery – Periodic Benchmarking
  4. 4. Outsourcing – IT (Rationale) Reasons IT is a Strategic Asset IT is a Key Driver of High Performance Benefits Reduce Costs Reduce Total cost of Ownership Transforms organization’s IT capability Improve Service, Quality, Delivery Capability Enables a broader strategic agenda
  5. 5. Outsourcing – IT (Profile) Application Outsourcing Application Development Application Testing Production Support Application Maintenance Enhancements / Upgrades Legacy Modernization Infrastructure Outsourcing IT Spend Management (Assets, Procurement) Data Center Services Service Desk Security Services Network Services Workplace Services
  6. 6. The Maturing of Outsourcing 1st Generation – Select a Single Large Vendor and contract large-sized ‘take-all’ deals: Gain competitive advantage Reap quick benefits Save time Easier management overhead Leading to risks and challenges Cost and SLA Targets not met “The prevalence of IT outsourcing megadeals valued at $1 billion or more dropped 67% …” according to Gartner Inc. Multi-Sourcing – Allocate separate IT functions to different vendors: Leverage the skills and value propositions of each vendor Enhance efficiency Reduce risk Operational Level Agreements provide service governance No loss of control owing to monopoly by vendor Pick ‘best-of-breed’ solution providers for specialization and domain knowledge
  7. 7. Outsourcing and Off-Shoring Outsourcing and Off-Shoring had distinct identities: Outsourcing = Work done by a vendor within the ‘industrialized world’ Off-Shoring = ‘Third World Country’ did mundane tasks at a much lower cost Offshoring to...America? "With the continued decline in value of the dollar and sluggish employment, I would expect to see more U.S.-based sourcing solutions evaluated by private and public sector clients across the globe," says Peter Iannone, EquaTerra's executive director for the Americas. CIO, December 2009 Global Sourcing has Matured Decision Makers make Strategic choices of Where, What, How and Whom based on: Cost Management Skills Experience Value Proposition to enhance efficiency and reduce risk
  8. 8. The Global Marketplace (Characteristic) “Outsourcing is less about labor arbitrage and more about access to Global Talent that is available” Information New Ideas Expertise Globalization “CONNECTS” Companies
  9. 9. The Global Marketplace (Leverage) Choose the work they want to do Where they want to do it Drive the greatest profit Globalization “AFFORDS” Leverage
  10. 10. Outsourcing & Employment FACT US & EU have witnessed high rates of un-employment Outsourcing has caused job transfers to locations overseas Location is insignificant in the maturing Outsourcing Model Advances in communications Improved computational technologies Availability of large pools of capable workers in the world
  11. 11. Outsourcing & Employment Biggest Players: India, China, Ireland, Israel, Former Soviet Block. New Players : Pakistan, Brazil, Chile and Ghana are some of those that are becoming players in the market. Reverse off-shoring
  12. 12. Outsourcing Today FACT Initially simple APP-DEV & MAINT. were given to emerging economies Drive down IT Cost Improve Efficiencies within IT EMERGENCE Now, outsourcing has matured and enables Companies to : • Enhance their Competitiveness • Drive Transformational Change (handle more critical business functions and processes) More and more jobs such as financial industry equity research, actuarial analysis and data modeling are moving to India with very encouraging results. Additionally medical research and engineering services in industries like aerospace and civil aviation are going to India. Mature Vendors now have operations in many new markets (S America, E Europe, China)
  13. 13. Conclusion Outsourcing is here to stay. It helps companies remain focused on their core business and leaves the back-room, non-core business to the experts without losing control. “Don’t just stretch the dollar, but create new dollars by unlocking value and revenue”