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  • 1. A P r o j e c t b y - M E G H A K U S H W A H A P R I Y A C H H A B R A A I S H W A R S H A R M A
  • 2. “The future shape of business is being redefined through outsourcing”
  • 3. 4 © 2005 Accenture All Rights Reserved. WHAT IS OUTSOURCING ? Outsourcing denotes the continuous procurement of services from a third party, making use of highly integrated processes, organization models and information systems. OUTSOURCERCOMPANY Services Organization Level Agreement Service Level Agreement
  • 4. WHY DO COMPANIES OUTSOURCE Reduce and control operating costs Improve host company focus Gain access to world-class capabilities Free internal resources for other purposes A function is time-consuming to manage or is out of control Insufficient resources are available internally Share risks with a partner company
  • 5. REASONS FOR OUTSOURCING
  • 6. WHAT CAN BE OUTSOURCED ? system integration data network mainframe data center voice network, internet/intranet maintenance/repair applications development e-commerce end-user support system
  • 7. TYPES OF OUTSOURCING Business process outsourcing (BPO) •involves the contracting of the operations and responsibilities of specific business functions to a third-party service provider. Engineering process outsourcing (EPO) •playing crucial role in efficiently supporting dynamic architecture, engineering and construction industries worldwide. Information technology outsourcing or ITO •is a company's outsourcing of computer or Internet related work. Knowledge process outsourcing (KPO) •describes the outsourcing of core business activities, which often are competitively important or form an integral part of a company's value chain. Therefore KPO requires advanced analytical and technical skills as well as a high degree of proprietary domain expertise. Legal outsourcing •refers to the practice of a law firm or corporation obtaining legal support services from an outside law firm or legal support services company A third-party logistics provider (3PL) •is a firm that provides service to its customers of outsourced (or "third party") logistics services for part, or all of their supply chain management functions.
  • 8. ADVANTAGES OF OUTSOURCING Low Operational Cost Low Labor and Technology Superior Technology Risk Mitigation Capacity Management
  • 9. PROBLEMS WITH OUTSOURCING Loss of Control Increased cash outflow Confidentiality and security Selection of supplier Too dependent on service provider Loss of staff or moral problems Time consuming Provider may not understand business environment Provider slow to react to changes in strategy
  • 10. INTRODUCTION OUTSOURCING IN INDIA Outsourcing of manufacturin g started in 1700 Outsourcing of services started in 1980 Earliest players in Indian outsourcing market were TEXAS INSTRUMENT, AMERICAN EXPRESS, SWISSAIR, BRITISH AIRWAYS, GE Global software giants like MICROSOFT, ORACLE, SAP and many other have established captive development centers in India. Indian companies too have aligned their internal processes and practices in International Standards such as ISO, CMM, SIX SIGMA etc In 2008, a study listed 6 Indian cities of Bangalore, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune, among the world's top 10 outsourcing destinations
  • 11. PROBLEMS WITH OUTSOURCING TO INDIA •Smaller firms are currently experiencing attrition of 100%+ per year High attrition a significant drag on productivity •Projects have reported that more than 75 percent of these global IT initiatives fall short of expectationsQuality of the Work •Indian firms (and their court system) have historically been notorious for their lax approach to protecting their customers’ source code and in turn calling it their own. Significant IP risk •Norm in India today is up to 20% pay increases every 6 months – that translates into 45% wage escalation per year!!Cost • the Indian work approach requires very detailed specifications with no room for interpretation.Work style • India has historically focused on IT (vs. software product). Talent base
  • 12. WHY OUTSOURCE TO INDIA Availability of qualified resources – industry standard certification Lateral knowledge skills – technology and business skills Better tax structures and tax holidays - SEZ Cost and quality arbitrage Enthusiastic and young population Economy on the growth path – GDP Strong and ethical Entrepreneurs
  • 13. OUTSOURCING- A BOON OR A BANE FOR INDIA Indian companies offer a wide variety of outsourced services. Outsourcing to India has been a satisfactory and profitable experience for most companies around the world. Indian outsourcing vendors have continuously adapted to internal and external challenges and the credit for this goes to Indian outsourcing companies and the successive enabling governments Great number of jobs are created Only left over work comes to Indian software industry, which is labour intensive and does not require brain or enhances skills of the personnel. Indian society has received with the advent of outsourcing. Youth is moving away from our culture and values..The gradual intellectual incapability and complacency is creeping into the youth of the nation. In future India can witness huge number of school dropouts which would in turn affect Indian economy in many ways.
  • 14. CONCLUSION Outsourcing For India Is A Boon Because It Has Strengthen The Indian Economy, But There Are Some Societal Issues Related With Outsourcing Which Can Makes It A Bane. Outsourcing being a boon or a bane, the decision lies with how we look at it and how it is channelized in our society.
  • 15. OUTSOURCING IN USA Introduction  Initially, a lot of outsourcing was to other American firms; later it involved moving production to foreign countries. Many companies rushed to spin off all but their most essential “core” activities.  Today, some of the world’s largest companies and biggest employers are the product of this outsourcing trend:  Sodexo in food service;  IBM in information technology;  Wackenhut, now known as G4S, in security services;  UPS and FedEx in logistics;  Foxconn and Lenovo in computer manufacturing.  Instead of the Rouge plant, the new model of industrial organization has become Nike, which outsources the making of all of its shoes, clothing and sporting equipment so it can concentrate on design and marketing.  Apple, outsources all of its hardware manufacturing.
  • 16. Has outsourcing production and manufacturing to low- wage countries helped or hurt the United States? In the United States, outsourcing is considered a bad word. American workers, with their technical expertise and widely-available Internet infrastructure, are highly desired. Many critics argue that outsourcing has been overhyped and that it is difficult to quantify its costs and benefits. The United States does not have a comparative advantage in manufacturing because of high wages and a relatively strong dollar (although the dollar has been on the decline in recent months). Slogans like “Buy American” have been popular rallying cries for years, and many people bemoan the outsourcing of jobs to low- wage regions like Asia and Latin America.
  • 17. US PRESIDENT BARACK OBAMA AND REPUBLICAN PRESIDENTIAL NOMINEE MITT ROMNEY MET IN HEMPSTEAD, NEW YORK TUESDAY EVENING FOR SECOND OF THREE PRESENTIAL DEBATES. ONE OF THE QUESTIONS WHICH WAS ASKED FROM BOTH OF THEM WAS, “THE OUTSOURCING OF AMERICAN JOBS OVERSEAS HAS TAKEN TOLL ON OUR ECONOMY.WHAT PLANS DO YOU HAVE TO PUT BACK AND KEEP JOBS IN US?”
  • 18. ANSWER ROMNEY’S ANSWER Want to cut down tax rates on small business, big employees so they want to be there in US China has become a currency manipulator and thus US manufacturers can’t compete with them OBAMA’S ANSWER Lower corporate tax As far as currency manipulator is concerned, the currency has gone up by 11% & have put trade burden on China that why exports increase in US and this will help in creating jobs in US Mentioned that reduced rate of tax paid will create 8,00,000 new jobs but in China, India, Germany
  • 19. There are two sides to every issue: 1. Outsourcing hurts America by sending jobs overseas. 2. Outsourcing helps America by allowing goods to be produced more cheaply, with savings being passed on to consumers.
  • 20. For the short term the country whose companies are outsourcing may see it as a shortcoming. But in the long run, the economy will be booming again. Thus to conclude, even if the outsourcing industry may seem to be a disgrace to the market, in the long term it is going to be the significant market share contributor. The seeds have been sown and the flowers are blooming, the fruits are not far to be reaped.
  • 21. THANK YOU