Outsourcing &
Types
Outsourcing is the process of assigning
company’s business processes to an external
agency in lieu of ...
Motivation for
outsourcing
Consider outsourcing
Identify functions to outsource
Vendor decisions
continue
benefits risks
f...
Motivation of Outsourcing
3 major categories of motivations
for outsourcing: cost, strategy, and
politics.
• Cost driven o...
Key Driving Factors
• Absence of specialists or experts
• Irregular demand for personnel
• High risk factor
• Emphasis on ...
Advantages
of
Outsourcing
Enhanced
returns on
investment
Lower labor
cost
Economies
of scale
Better
revenue
realization
In...
Disadvantages of
Outsourcing
Loss of
control
Quality
problems
Sluggish
response
times
Hidden costs
Low
benefits and
result...
Outsourcing Decision Matrix
The Outsourcing Decision Matrix, helps you consider two
important factors in outsourcing a tas...
Outsourcing Decision Matrix
Offshore or Home shore? The choice is yours!
• Small businesses are maturing to look at a variety of factors
before making...
Factors for Successful Outsourcing
• Understanding company goals and objectives
• Strategic vision and plan
• Selecting th...
Vendor Decisions
• Technical Expertise
• Quality
• Vendor's Expertise in Your
Business Space
• Overall Business Strategy
IBM
• IBM was a vertically integrated company in the 1990s.
• Until 1995 IBM built 100% of its printed circuit boards PCBs...
• Why outsourcing ?
Outside suppliers had the required technology
Suppliers providing at lower costs
• 1986-96, proportion...
CONCLUSION- Current
Scenario
Global Scenario:
• Trends changing gradually.
• Traditional model of outsourcing is now repla...
THANK YOU!
• Juhi Pancholi
• Deeksha Mirakhur
• Rashne Gautam
• Pranavi Kapur
• Nishant Chachra
• Pranay Chand
• Mili Vasa...
Outsourcing decisions final
Outsourcing decisions final
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Outsourcing decisions final

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  • Plz complete the case study Nishant and Deeksha.
  • Conclusion to be given by Pranavi.
  • Outsourcing decisions final

    1. 1. Outsourcing & Types Outsourcing is the process of assigning company’s business processes to an external agency in lieu of enhancing service quality, driving innovation or deriving benefits of lower labor costs. There are 5 types: 1. Contracting out the activities 2. Outsourcing the service 3. In sourcing 4. Co-sourcing 5. Benefit based relationship.
    2. 2. Motivation for outsourcing Consider outsourcing Identify functions to outsource Vendor decisions continue benefits risks factors yes no end OUTSOURCING DECISION FRAMEWORK
    3. 3. Motivation of Outsourcing 3 major categories of motivations for outsourcing: cost, strategy, and politics. • Cost driven outsourcing (pvt. industry) • Strategy-driven outsourcing (pvt. industry) • Politically-driven outsourcing.
    4. 4. Key Driving Factors • Absence of specialists or experts • Irregular demand for personnel • High risk factor • Emphasis on perfect processes • Savings in management time • Achieving and maintaining objectivity.
    5. 5. Advantages of Outsourcing Enhanced returns on investment Lower labor cost Economies of scale Better revenue realization Innovation Efficiency of management Decisions Increases speed and quality. Optimizes resource utilization Reduces cash outflow Flexibility in terms of Service delivery
    6. 6. Disadvantages of Outsourcing Loss of control Quality problems Sluggish response times Hidden costs Low benefits and results Lingual accent variation Enraged employee unions Bad publicity & ill will
    7. 7. Outsourcing Decision Matrix The Outsourcing Decision Matrix, helps you consider two important factors in outsourcing a task: • How strategically important is the task to your business?  Strategically important tasks are sources of competitive advantage. • What is the task's impact on your organization's operational performance?  Tasks which have a high impact on operational performance.
    8. 8. Outsourcing Decision Matrix
    9. 9. Offshore or Home shore? The choice is yours! • Small businesses are maturing to look at a variety of factors before making the outsourcing decision. Tasks that require presence in the same time zone and a cultural awareness are being Home shored. Tasks that are not time sensitive or heavily influenced by culture are being Offshore. How to benefit from this trend: • Evaluate if your outsourcing partners can train themselves on some of the cultural aspects if they belong to a different geography. • Offshore only those tasks that are well defined. For tasks that need your input several times a day, choose a provider who can work in your own time zone.
    10. 10. Factors for Successful Outsourcing • Understanding company goals and objectives • Strategic vision and plan • Selecting the right vendor • Properly structured contract • Open communication • Senior Executive support and involvement • Use of outside expertise.
    11. 11. Vendor Decisions • Technical Expertise • Quality • Vendor's Expertise in Your Business Space • Overall Business Strategy
    12. 12. IBM • IBM was a vertically integrated company in the 1990s. • Until 1995 IBM built 100% of its printed circuit boards PCBs. Now it makes 10% of them. • IBM used to make 85% of the memory chips used in its computers; in 1999 its 15% . • Keyboards and power supplies were built in house in the past now outsourced. • IBM used to assemble all its own computers now contract manufacturers build most of them.
    13. 13. • Why outsourcing ? Outside suppliers had the required technology Suppliers providing at lower costs • 1986-96, proportion of IBM’s revenue spent on outside suppliers increased from 28% to 51%. • The strategy adopted is “where we make a difference” • Competitive advantage- they got the components at a lower price • HOW TO CHOOSE VENDOR ? Control component sources by directing contract manufacturers to specific sources, thereby reducing costs by 65 million dollars • ECONOMIC OUTCOME- reduction in costs by 20%
    14. 14. CONCLUSION- Current Scenario Global Scenario: • Trends changing gradually. • Traditional model of outsourcing is now replaced with a global sourcing model. Indian Scenario: • Not merely as a cost reduction solution but one of co-creating future value.
    15. 15. THANK YOU! • Juhi Pancholi • Deeksha Mirakhur • Rashne Gautam • Pranavi Kapur • Nishant Chachra • Pranay Chand • Mili Vasani.

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