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Outsourcing 1st module


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Outsourcing 1st module

  1. 1. Outsourcing Business Administration Group 5202 Created By: Aukse Rusteikaite Christine Reeb Nicole Ilnitski
  2. 2. Outline  Definition  History of Outsourcing  Outsourcing Today  Benefits of Outsourcing  Disadvantages  Frequently outsourced tasks  Types of business sectors usually outsourced  Types of business sectors rarely outsourced  Biggest outsourcing companies  Reasons for outsourcing  Example  Conclusion
  3. 3. Outsourcing is an arrangement in which work is done by people from outside your company, usually by a company which is expert in that type of work.
  4. 4. History Of Outsourcing 0 1 2 3 4 5 6 7 8 9 10 1900-s and Early 1910-s 1920-s 1930-s 1940-s 1950-s 1960-s 1970-s 1980-s 1990-s 2000-s growth rate Outsorsing Requirment • Companies didn’t use outsourcing; • Manufacturers take product from raw materials stage through the production themselves; • Goods shipped by their own resources; • Products delivered to company-owned stores. Industrial Revolution • Companies started to outsource some services; • Independent companies opened to serve multiple clients (architecture, engineering, insurance etc.); • Located in cities as the companies they were performing services for.
  5. 5. Late 20th century Outsourcing Manufacturing • Production of consumer goods; • By the 1970s consumer electronics products; • Once company owners were confident- they could outsource manufacturing functions and shipping. Outsourcing for Payroll Services • Computer companies were first • By the end of 1980s other services started to be outsourced • (billing, accounting, and word processing)
  6. 6. Outsourcing today 0 20 40 60 80 100 120 140 160 180 Outsorsing ,$ million China Canada UK Romania Russia Ukrain USA India  Companies such as call centres are kept busy from a steady stream of clients looking to outsource these duties.  When a customer calls an insurance company with a question or a concern, he or she will likely be speaking with someone who is working for a separate company, even though that person has been trained to handle customer service duties.  Many people work as independent contractors providing services to businesses of all sizes.  Outsourcing is a growing trend that is not likely to slow down in the future. Some individuals may find that they are laid off from the company they work for, and are then hired back to that some company as a contractor!
  7. 7. Benefits of outsourcing Concentrate on Core Activities Cost and Efficiency Savings Risk Management Staffing Flexibility Operational Control Reduced Overhead Quality /State of the Art Transparency
  8. 8. Disadvantages of outsourcing Quality Problems Loss of Managerial Control Hidden Costs Bad Publicity
  9. 9. Frequently outsourced tasks 0,00% 5,00% 10,00% 15,00% 20,00% 25,00% 30,00% 35,00% 40,00% 45,00% Technical support Development and Integration Call Center Operations IT infrastructure Data Entry Training Web development HR Marketing and Sales Other Companies are looking for ways to streamline their operations
  10. 10. Types of business sectors using outsourcing Public Services and Non-Profit Financial Services Manufacturing Business Serivces Telecomunication Delivery Travel / Transport Trade Media Insurance Health Care
  11. 11. Types of business sectors rarely outsourced  Any company at least once use outsourcing services  Government  Banks  Small trade shop  Start up business
  12. 12. Biggest outsourcing companies  Top 10 companies, along with the number of outsourced jobs: 63,700 22,400 17,450 15,000 15,000 14,250 14,000 13,000 10,426 10,800
  13. 13. Reasons for outsourcing
  14. 14. Example  Business type: IT services Consulting  Project: Description of processes in large company and create auto documentation based on created process in short time  Outsource: Script developer  In project: Create script-report  Reasons: Company had no sufficient number of experts for project implementation in periods  Minus: lost management control under outsourcer, additional requirements have added cost
  15. 15. Conclusion  Outsourcing is often portrayed negatively in the media. There is no doubt some people are hurt by outsourcing. The outsourcing theory, however, is intended to be positive, especially in the long term, as it allows companies and people to focus on what they do best.
  16. 16. QUESTIONS  When was outsourcing developed?  What kinds of disadvatages of outsourcing do you know?  Give 3 Reasons for outsourcing.  Which company outsourced the highest amount of jobs?  Are all business sectors outsourced?