2. • Outsourcing is the contracting out of a
business process to a third –party
• Outsourcing includes both foreign and
domestic contracting
3. Quantifiable
• Reduced operating costs (estimated 20-55%)
• Labour arbitrage (estimated 10-30%, reducing cost
per head by moving to a low cost location)
• Productivity and process improvement (estimated
5-15%, process excellence and IT enablement to
improve cycle times, lower cost and increase quality)
• Reduced overheads (estimated 5-10%)
• Improved working capital (through the sale of assets
and/or facilities to the vendor)
• Reduced capital commitments
• Improved quality.
4. Qualitative
• Improved service delivery (access to world class
processing)
• Stronger control environment (improved controls
through process simplification and focus)
• Platform for transformation (leverage the
transformation capabilities of the vendor)
• Improve focus on core capabilities (retained staff
can focus on ‘value-add’ activities)
• Improved relationships with customers and suppliers
Access to talent
5. Other benefits
• Release of cash from the transfer of assets
• Access to leading-edge technology without capital
investment
• Ability to transfer risk to the service provider
• Desire for flexible and scalable solutions that support growth or
divestitures
• Drive to focus more on core processes and business activities
• Delivery of continuous improvements in process effectiveness and
efficiency
• Leverage of scarce resources.
6.
7. Advantages of Outsourcing
• Cost Savings
• Focus on Core Business
• Improved Quality
• Customer Satisfaction
• Operational Efficiency
8. Disadvantages of Outsourcing
• Quality Risk
• Quality Service
• Language Barriers
• Employee/Public Opinion
• Organizational Knowledge
• Labor Issues
• Legal Compliance and Security
• Employee Layoffs
