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Overview of Outsourcing
2
Agenda
• Introduction to Outsourcing
• Preparing for Outsourcing
• Running Outsourcing
• Next Steps in Outsourcing
3
INTRODUCTION
A Working Definition of Outsourcing
Outsourcing denotes the continuous
procurement of services from a third...
4
INTRODUCTION
On the origins of Outsourcing
• 50 - 70 Vertical and Horizontal Integration
• 70 - 80 Foreign Direct Invest...
5
INTRODUCTION
Types of Outsourcing
Business
processes
Application Development
and Maintenance
IT-infrastructure
BPO: Busi...
6
INTRODUCTION
BPO - Business Process Outsourcing
Degree of industrialization
medium highlow
Customized Industrialized
Sin...
7
INTRODUCTION
AMO - Application Management Outsourcing
8
INTRODUCTION
Sourcing of Outsourcing
• Off-Site – Local service providers
• Near Shore – Proximity cross-border service
...
9
INTRODUCTION
Typical Outsourcing Clients
Argentaria
Banca Italease
BBVA
Banco Rio de la Plata
Bankiter
Barclays Bank plc...
10
• Access best in class business processes
• Harness leading technologies
• Increase efficiencies
• Enhance capabilities...
11
INTRODUCTION
Value Contribution of Outsourcing
12
PREPARING FOR OUTSOURCING
The Burning Platform
BUSINESS CONCERNS
• Perceived low availability of services
 Perceived l...
13
PREPARING FOR OUTSOURCING
Understand Internal Constraints
• Availability of Seed Money – I need to reduce cost,
this re...
14
Next Steps in Outsourcing
• Outsourcing will continue to grow, mainly for BPO…
• Services will become more standardized...
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Outsourcing

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Outsourcing

  1. 1. Overview of Outsourcing
  2. 2. 2 Agenda • Introduction to Outsourcing • Preparing for Outsourcing • Running Outsourcing • Next Steps in Outsourcing
  3. 3. 3 INTRODUCTION A Working Definition of 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. 4. 4 INTRODUCTION On the origins of Outsourcing • 50 - 70 Vertical and Horizontal Integration • 70 - 80 Foreign Direct Investment • 80 - 90 Global Sourcing • 90 - Outsourcing
  5. 5. 5 INTRODUCTION Types of Outsourcing Business processes Application Development and Maintenance IT-infrastructure BPO: Business Process Outsourcing ASP: Application Service Provider DBRO: Design, Build, Run & Operate ADM: Application Develop. & Maintenance ITO: IT Infrastructure Outsourcing ITS: IT Services, Managed Hosting Administrative processes APO: Administrative Process Outsourcing Outsourcing models: BPO AMO SDO
  6. 6. 6 INTRODUCTION BPO - Business Process Outsourcing Degree of industrialization medium highlow Customized Industrialized Single service delivered to multiple clients simultaneously Similar services delivered to multiple clients Custom designed services leveraging know-how One-to-one One-to-many
  7. 7. 7 INTRODUCTION AMO - Application Management Outsourcing
  8. 8. 8 INTRODUCTION Sourcing of Outsourcing • Off-Site – Local service providers • Near Shore – Proximity cross-border service providers • Off-Shore – Remote Cross-border service providers
  9. 9. 9 INTRODUCTION Typical Outsourcing Clients Argentaria Banca Italease BBVA Banco Rio de la Plata Bankiter Barclays Bank plc Bilbao Bizkaia Kutxa (BBK) Caixa Catalunya Caja Madrid CortalConsors Credit Lyonnais Depository Trust & Clearing Deutsche Bank DnB NOR Morgan Stanley Providian Royal and SunAlliance Sallie Mae Santander SchmidtBank SEC Padova SEI UBS Life International Universal Leven Workers’ Compensation Board Xelion Espirito Santo Sequros GE Consumer Finance Grupo Financiero BanCrecer Guy Carpenter Immobiliere 3F Infocaja ING Group Italian Pension Agency Johannesburg Securities Exchange JPMChase London Stock Exchange Losango Mediolanum Meridia Ameren BC Hydro Borden Chemical BP Britannia Operator Cogema Dow Chemical DuPont Dynegy Direct Energy Essential Home Services (DEEHS) Enbridge Gas Distribution Enbridge Gas New Brunswick Freeport McMoRan RAG American Coal Repsol YPF Rhodia Siam Cement Sithe Energies Slovnaft Southern Company GAS Talisman Energy Ltd. Terasen Utility Services Thames Water Ticona Total E&P UK plc (formerly TotalFinaElf) Halliburton LASMO plc Lyondell-Citgo Refining MOL - Hungarian Oil & Gas MidAmerican Energy Norsk Hydro Orange and Rockland Utilities PPL (Pennsylvania Power & Light) 02 (formerly BT Cellnet) Alcatel Algar AT&T Avaya BellSouth Boston Scientific BT Cegetel Citrix eBay EMC ETS Sonera Sun Microsystems Tecnomen Telecom Argentina Telecom Italia Telefonica Argentina Texas Instruments Thomson VIA Networks XM Satellite Radio Fujitsu Siemens Computers Infineon Infostrada JVC do Brasil Ltda. & Nokia Gradiente Industrial O Globo Empresa Olivetti Tecnost Omnitel2000 QinetiQ Siemens Mobile Communications Italy SITA Alcan Ardent Asahi Brewery Astilleros Espanoles, now IZAR AstraZeneca Best Buy Brahma Bristol Myers Squibb Campofrio Carrefour Caterpillar Delphi Delta Diageo DSV Group eLSG SkyChefs.com Neptune Orient Lines New Look Payless Shoe Source Pfizer Renault Resort Condominiums International (RCI) Sainsbury’s Sara Lee Solar Turbines Texas Medicaid Transnet Portnet UPS Wärtsilä Wyeth Edgars Consolidate Stores Limited Exel plc HCSC Health Alliance Plan Impregilo Achieve Interstate Brands KLM Royal Dutch Airlines Levi Strauss LSG Sky Chefs Thomas Cook Marriott MDB Information Network Mecalux Medicines Control Agency Milwaukee County Mental Health Multibras Electrodomesticos Whirlpool
  10. 10. 10 • Access best in class business processes • Harness leading technologies • Increase efficiencies • Enhance capabilities • Expand service • Enrich customer relations • Improve supplier relations • Free up management time • Decrease operating costs Key drivers for Outsourcing (Survey Results) INTRODUCTION Why do outsourcing? - Survey Results
  11. 11. 11 INTRODUCTION Value Contribution of Outsourcing
  12. 12. 12 PREPARING FOR OUTSOURCING The Burning Platform BUSINESS CONCERNS • Perceived low availability of services  Perceived low level of service quality (accessibility, turn-around time etc.)  No clear service reporting and service management  Roles & Responsibilities not clear. Processes unclear, too slow, too many hand-offs • Slow and error-prone service introduction • Unsatisfactory support of remote sites & subsidiaries • No service culture • Cost allocation & charges unclear and cannot be influenced by business decisions  … IT CONCERNS  Unreasonable service level expectations from business  No cost & resource awareness  Large number of non-standard work requests • Overlarge project portfolio, paired with spaghetti development infrastructure • High-level of business applications • Inefficient / underutilized server platform, aging central technology platforms and complex networks  Large and divers skill pool required to support infrastructure  … Change Drivers Management Control Service Scope & Level Budget Levels Financial Flexibility Infrastructure Quality Skill & Capability Pool Organizational Impact Time to Benefit Client Rating
  13. 13. 13 PREPARING FOR OUTSOURCING Understand Internal Constraints • Availability of Seed Money – I need to reduce cost, this requires efficiency gains, efficiency gains require investments… • Structural Inflexibility – Your current business and application architecture may not allow for simple and low cost ICT changes • Time to Benefit – Most “quick-wins” have already been explored over the last couple of years. Major initiatives have pay-backs seldom shorter than 24 – 36 months • Business vs. IT Projects – Most projects are invisible to the normal business users and do not directly contribute to business revenue generation • Capacity & Know-How – Are there sufficient internal resources available to drive the change in a timely fashion? Will heavy external resource usage kill the business case? • Change Capacity – Can the internal organization absorb this change now (ex. Overall moral, unions, etc.) • Sustainability – Can initiatives be maintained in light of business development? € 6 Months 12 Months 18 Months 24 Months 30 Months 36 Months Change Application & Technology Architecture Head Count & Infrastructure Improvement ILLUSTRATIVE Procurement, Financing & Quick Wins Reduce External Services Operate & Infrastructure 45% Maintenance 15 % SWR & NSWR 10 % Business Projects 20 % Manage & Support 10 % ICT Budget - Illustrative - Discretionary Fixed
  14. 14. 14 Next Steps in Outsourcing • Outsourcing will continue to grow, mainly for BPO… • Services will become more standardized, creating new norms • New service providers will appear in Eastern Europe and China • Asian players will move on-shore and compete head-on with traditional local players • Local regulations will continue to be opened up to support cross-border services • Politics will start to address increasing social issues and concerns

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