FOR KERALA UNIVERSITY BEd ENGLISH SYLLABUS SECOND SEM

1. OUTSOURCING
BY
ROBERT M KUNJU
SECOND SEMESTER ENGLISH
MANNAM FOUNDATION CENTRE
FOR EDUCATION TECHNOLOGY

2. “Another firm’s employees carrying out tasks
previously performed by one’s own
employees”.

3. • Outsourcing is a practice in which an individual or
company performs tasks, provides services or
manufactures products for another company functions
that could have been or is usually done in-house.
• Outsourcing is typically used by companies to save
costs.

4. • Outsourcing is a common trend in information
technology and other industries.
• Businesses outsource for services that are seen
as intrinsic to managing a business and serving
internal and external customers.
• Products, such as computer parts, and services,
such as payroll and bookkeeping, can be
outsourced.

5. • Sometimes, the entire information
management of a company is
outsourced, including planning and
business analysis as well as the
installation, management, and
servicing of the network and
workstations.

6. Reasons for outsourcing
• In addition to saving on overhead and labour costs, the
reasons companies employ outsourcing include improved
efficiency, greater productivity and the opportunity to
focus on core products and functions of the business
• Furthermore, more companies are looking to
outsourcing providers as innovation centres.

7. Benefits of Outsourcing
• Strategic Restructuring
Companies are revisiting their modus operandi
(operational model) and evaluating business
operations to look at ways to restructure and make
business units more efficient. Outsourcing should be
considered as one alternative which, if implemented
effectively, will play a key role in helping businesses
attain higher cost efficiencies.

8. • Budget Cuts
There is growing pressure on companies to trim costs and
reduce budget allocations for the year. Budgetary cuts
directly impact discretionary spending which can be
enforced without significantly affecting day to day
operations.

9. • Risk Mitigation
Assessing and mitigating risk is key in any
successful outsourcing relationship – both
from the customer and provider perspectives.
Being aware of the risks involved and having
an ability to monitor, evaluate and manage
these risks are critical. this means also having
the formal metrics or processes for doing so.

10. •Focus On Core Activities
In rapid growth periods, the back-office operations of a
company will expand also. This expansion may start to
consume resources (human and financial) at the expense of the
core activities that have made the company successful.
Outsourcing those activities will allow refocusing on those
business activities that are important without sacrificing
quality or service in the back- office.
Example: A company lands a large contract that will
significantly increase the volume of purchasing in a very short
period of time; Outsource purchasing.

11. •Cost And Efficiency Savings
Outsourcing is a good option when organization back-
office functions that are complicated in nature, but the
size of the company is preventing from performing them
at a consistent and reasonable cost.
Example: A small doctor's office wants to accept a
variety of insurance plans. One part-time person cannot
keep up with all the different providers and rules, so the
task is outsourced to a firm specializing in medical
billing.

12. •Reduced Overhead
Overhead costs of performing a particular back
function are extremely high. Consider outsourcing
those functions which can be moved easily.
Example: Growth has resulted in an increased need for
office space. The current location is very expensive, and
there is no room to expand. Outsource some simple
operations in order to the need for office space. For
example, outbound telemarketing or data entry.

13. •Operational Control
Operations whose costs are running out of control must
be considered for outsourcing. Departments that may
have evolved over time into uncontrolled and poorly
managed areas are prime motivators for outsourcing. In
addition, an outsourcing company can bring better
management skills to the company than what would
otherwise be available.

14. •Staffing Flexibility
Outsourcing will allow operations that have seasonal or
cyclical demands to bring in additional resources when
organization need them and release them when
organization has done.
Example: An accounting department that is short
handed during tax season and auditing periods.
Outsourcing these functions can provide the resources
for a fixed period of time at a consistent cost.

15. Demerits of outsourcing

16. • Creeping privatisation of the public sector
reducing government control
• Job losses
• Loss of internal competence to perform an
outsourced activity thereby making subsequent
insourcing of that activity problematic.
• Need to manage new relationships with the
outsource.
• Difficulty in deciding what and has much to
outsource.

17. THANK YOU