Outsourcing

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Outsourcing

  1. 1. Group 1: Outsourcing: From cost cutting to innovation Baleegh Khan Lenka Stoklaskova Ratiel Gapa Sara Chahine
  2. 2. Introduction •Outsourcing  cost cutting, cost restructuring, transfer the risks of a defined process to a third party •Smartsourcing  innovation, balance risk and opportunities, focus on its core activities •Challenges and future trends  flexibility, overall control, cultural diversity
  3. 3. What is Outsourcing? • A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. • The contracting or subcontracting of noncore activities in which a company holds competitive advantage.
  4. 4. Reasons for Outsourcing Source: http://www.arcusglobal.com
  5. 5. Outsourced Business Segments • Information Technology • Human Resources • Facilities and real estate management • Accounting
  6. 6. Types of Outsourcing • 1- Business Process Outsourcing (BPO): Contracting of the operations of a specific business process to a third party. It is typically categorized into back office outsourcing and front office outsourcing.
  7. 7. Types of Outsourcing • 2- Knowledge process outsourcing (KPO): The allocation of high-level tasks to an outside organization.
  8. 8. Advantages of Outsourcing • Cost Reductions • Access to a team of professionals • Focus on core activities • Develop Internal Staff • Better Systems • Distribution of Risk
  9. 9. Disadvantages of Outsourcing • Loss of Managerial Control • Threat to security and confidentiality • Delays
  10. 10. What is Smartsourcing? • Smartsourcing, simply put means outsourcing intelligently. • Outsourcing is only one part • Bridging the gap between high performance core competencies and poor performance non-core activities. • Let you see the spectrum of your organization capabilities • determine how to best achieve the highest level of performance, cost and innovation • Intimate relationship between the organization and its service partner
  11. 11. Difference between Outsourcing and Smartsourcing OUTSOURCING SMARTSOURCING CUT COSTS CUT COSTS + INCREASE INNOVATION STREAMLINE OPERATIONS STREAMLINE THE VALUE CHAIN PARTNER ON WHAT YOU KNOW PARTNER TO DEFINE WHAT YOU DON’T KNOW TACTICAL IMPROVEMENT STRATEGIC EXCELLENCE DISCONTINUOUS CONTINUOUS ARMS LENGTH PARTNERSHIP TRUST-BASED PARTNERSHIP
  12. 12. How can Smartsourcing create innovation? • Key Principles: • Flexibility (short term relationship, change of scope) • Preparation (measurement framework with real data) • Choice (multisourcing, reduce provider lock-in, greater options) • Planning (picture of end state, change management) • Control (retain the business value functions) • Partnership (shared ownership, common goals)
  13. 13. Smartsourcing Based on • Products and services • Business model • Processes • Supply chain • Customer care
  14. 14. Key Areas
  15. 15. Issues in outsourcing • A multi-objective solution • Flexibility – a trending theme • Due diligence and effective vendor engagement • Higher costs/slower product development • Environmental context
  16. 16. Conclusion • Careful analysis • Effective outsourcing • Don’t ‘Outsource your soul’
  17. 17. References • Brad Vaughan, Ken Buchanan, & Richard Evans Manageability Services Practice - White Paper September 2005 • T. M. Koulopoulos: Smartsourcing: Driving innovation and growth through outsourcing, Platinum Press, Avon, 2006 • Schwenker, S. Boetzel: Making growth work - How companies can expand and become more efficient, Sprin- ger Berlin Heidelberg, Hamburg, 2007 • http://www.entrepreneur.com • http://www.investopedia.com • http://www.businessdictionary.com • http://www.sitel.com • http://www.outsourcing.com • http://www.venturenavigator.co.uk
  18. 18. Questions?

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