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Outsourcing introduction & issues


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Published in: Business, Economy & Finance

Outsourcing introduction & issues

  1. 1. Report on contemporary issues in management Submitted By Nishant sharma IIIM,Jaipur
  2. 2. INTRODUCTION INTRODUCTIONA Working Definition of Outsourcing Services COMPANY OUTSOURCER Organization Service Level Level Agreement Agreement Outsourcing denotes the continuous procurement of services from a third party, making use of highly integrated processes, organization models and information systems.
  3. 3. INTRODUCTION What is Outsourcing? A Working Definition of OutsourcingOutsourcing - “the strategic use of outside resources to perform activities traditionally handled by internal staff and resources” Dave GriffithsWhy Outsource? Provide services that are scalable, secure, and efficient, while improving overall service and reducing costs
  4. 4. Why do Companies Outsource?
  5. 5. Key areas of outsourcing ?•Information Technology/IT solutions•Call Centers•Finance & Accounting Outsourcing•Procurement Outsourcing•Textiles•Manufacturing• Human resource Management
  6. 6. outsourcing
  7. 7. Advantages of outsourcing Cost Skilled Time zone Effective Expertise difference IncreasedFocus on core Distribution of productivitycompetencies risk and Efficiency Improving Better Access to customer people world-class service management solutions
  8. 8. Disadvantages of outsourcingLoss Of Threat to Hidden Security andManagerial Costs ConfidentialityControl Tied to the Quality Bad Publicity Financial Well- Problems Being of Another and Ill-Will Company lose talent Lack of inside within Linguistic customer your barriers focus company
  9. 9. Problems with outsourcing• Loss of Control• Increased cash outflow• Confidentiality and security• Selection of supplier• Too dependent on service provider• Loss of staff or moral problems• Time consuming• Provider may not understand business environment• Provider slow to react to changes in strategy
  10. 10. Types of outsourcing• Business process outsourcing (BPO) BPO is a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business functions or processes to a third-party service provider.
  11. 11. Types of outsourcing• Knowledge process outsourcing (KPO) KPO describes the outsourcing of core business activities, which often are competitively important or form an integral part of a companys value chain. Therefore KPO requires advanced analytical and technical skills as well as a high degree of proprietary domain expertise
  12. 12. Types of outsourcing• Legal process outsourcing (LPO) LPO refers to the practice of a law firm or corporation obtaining legal support services from an outside law firm or legal support services company. This process has been marked by the practice of outsourcing any activity except those where personal presence or contact is required.
  13. 13. Types of outsourcing• Recruitment process outsourcing (RPO) Recruitment Process Outsourcing is a form of business process outsourcing (BPO) where an employer outsources or transfers all or part of its recruitment activities to an external service provider.
  14. 14. Types of outsourcing• Engineering process outsourcing( EPO) EPO offers global consulting and outsourcing services providing end-to-end services in the areas of Engineering and Technical Process Outsourcing.
  15. 15. 1970s to early 1990s 1994 to 1998 1999 to 2001 2001 to present
  16. 16. Figure 1: How will the outsourcing market develop?
  17. 17. • 40% to 50% of the top 500 companies in the world is leveraging on outsourcing for most of their business processes.• current figures values this robust industry to a staggering $20billion USD.• On an average global outsourced projects involve about 28% thatbelong to the hardcore IT sector, 11% to finance sector, 15% to salesand marketing and 9% from administrative sector. The remaining 22%belong to many other different sectors such as consumer distresscalls, general data segregation jobs, tourism etc.