The Real Cost Of Outsourcing
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The Real Cost Of Outsourcing

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    The Real Cost Of Outsourcing The Real Cost Of Outsourcing Presentation Transcript

    • The Real Cost of Outsourcing Group 1 Robert Bodtke Karstin Webber Nick Elhart Caleb Jobson Brook Carter Caley Bolderson
    • What is Outsourcing? • It’s the transfer of parts or all of a organizations existing data processing hardware, software, communications network, and systems personal to a third party • A small scale example: Accounting • A large scale example: Pfizer, GM
    • Why Outsourcing? • Offers to cut data processing by 50% • Supplies special expertise as-needed • State-of-the-art technology and training • Technology conversions transparent to users • Get clients out of data processing painlessly
    • How Outsourcing Works • Transfer company’s systems to outsourcing vender • New system development • Some excising employees are terminated • New employment conditions are negotiated • In some cases the data center is relocated
    • How Can Outsourcing be Used Effectively? • Establish a strategy for balance • Investigate possibility of turning IS into internal or external contractors or consultants • Analyze cost savings vs. emotional cost • Familiarize themselves with outsource vendors • Keep staff informed
    • QUICK SAVING VS LOST PRODUCTIVITY
    • Quick Savings -Cost saving’s in salaries -Older people may quit therefore forgoing their pensions (peak at age 20-30) - Superior management already in place, outsourcing company has the technology and specialized team members to deal with certain parts of that company
    • LOST PRODUCTIVITY • Employees are likely to lose moral and diminish in productivity • Key people may resign • Company may choose the wrong outsourcing company • A company could become hostage to the outsourcing vendor e.g. they may be under contract to this vendor only and not able to make the progress they want in specified areas because of a binding contract
    • Reality for the Employees • Many employees feel deserted and betrayed by their employer. • When new opportunities within the company may arise for the employees (travel, training, improved benefits), the reality is that most of them will be laid off. • Many older employee are also forced into early retirement.
    • 3 C’s of a Model Organization •Consultants: project services that require specialized personnel •Contractors: cleaning, copying, stocking, inventory, billing, and payroll •Core management group: plans, directs, controls, organizes, and staffs organization *The 3 C’s are usually applied incorrectly thus are inefficient
    • What Can be Won by Outsourcing? • Up to date resources • Staff will be free to be more productive in their areas
    • Conclusion 1 • Real costs of outsourcing – Emotional costs – Productivity loss – Misunderstanding roles and responsibilities rather than effectively implementing 3 C’s
    • Conclusion 2 Outsourcing has its benefits but definitely has its costs from an operating business perspective. The main reason companies move or outsource is to increase profit. Many people believe this should be regulated, because it has devastated economies across America.
    • Questions…. •Do you think it is unethical for a business to outsource to a different country to hire cheaper labor when their business (at its current location )is very profitable? •Do you know anyone that has been affected by outsourcing? •Outsourcing ships American jobs to different countries. Do we want our country to move to a point where we import everything we use and need? What happens when they stop trading with us?
    • YOUR JOB
    • Your Job Your Job Your Job
    • Do you want this to happen to you?