The document discusses the history and evolution of outsourcing in various industries from the 1980s to present day. It covers the reasons companies outsource functions like production, purchasing, logistics, and services to reduce costs and risks. The document also outlines advantages and disadvantages of outsourcing as well as best practices for effective outsourcing.

1. Outsourcing Anand Raj Singh

2. Brief History Of Outsourcing IT Outsourcing Contract Signed By Eastman Kodak In 1989 Chapter 1 of Outsourcing Launched Early 90’s Saw Big Companies In Big Trouble Characteristics of Chapter 1 of Outsourcing

3. Industry Segmentation Service Consulting Legal Design BPO etc…… Manufacturing Production Purchasing Logistics etc…..

4. Production Outsourcing Cost Saving The external vendors work across corporate boundaries, combine various production volumes of multiple clients, maximize the utility of machines, labor, and capital, thereby finally achieving the cost reduction. Labor Cost Fixed Cost Inventory Cost Capital Cost

5. Production Outsourcing Advantages & Disadvantages Is Production Outsourcing Good? Increased Flexibility Core Competence Focus Reduced Risks Managerial Control Loss Vendor Relationship Management Risks Internal Talent Loss Advantages Disadvantages

6. Production Outsourcing Steps In Production Outsourcing: Supplier Proposals Supplier Competition Negotiations Contract Finalization Transition Transformation Execution Of Outsourcing Termination or Renewal

7. PURCHASING “ Purchasing refers to a business or organization attempting to acquire goods or services to accomplish the goals of the enterprise” - National Purchasing Institute Company name

8. PURCHASING Advantages Of Outsourcing Reduce Costs, Improve quality and Optimize Operations ---Raw material purchasing Share Risks & Stop Product Duplication Company name

9. PURCHASING Disadvantages Of Outsourcing Loosing Managerial Control Hidden Cost - Legal costs - currency value differences - government mandated regulations, duties and tariffs - transportation time, cost and Customs requirements

10. PURCHASING Special Considerations when Outsourcing Purchasing Considerations Product Process Location Are we sourcing the right part or the right product? The absolute lowest direct cost isn’t always the best thing to do Quality and total cost checking

11. PURCHASING Why Outsourcing? Physical assets Intangible capabilities When Outsourcing? When a partner could provide a capability more effectively than the company could itself.

12. PURCHASING How? Identifying Core Components Of Business Identifying Economies Of Scale Identifying The Implication Of No Loss Of Quality Due To Long Distance Sourcing

13. PURCHASING

14. Logistics Outsourcing Definition Why 3PL Has Grown Greater Complexity Shorter Cycle Time Latest Logistics Technology Types of 3PL Standard 3PL provider Service Developer Customer Developer

15. Logistics Outsourcing When Should 3PL Be Used? Disadvantages

16. Logistics Outsourcing How To Do Logistic Outsourcing Evaluate Corporate Strategy Identify Hidden Costs Identify Company’s Existing Resources Recognize Timeframe Request For Proposal (RFP) Understand 3PL Providers Measurement

17. Service Outsourcing “ If you don’t do it, you won’t live to compete”

18. Advantages of Service Outsourcing/off-shoring Reduce & Control The Operating Cost. Gain Access To World-Class Capabilities. Free Internal Resources For Other Purposes. Gain Access To Preempt Resources. Reduces & Helps Transfer Risks. Handle Out Of Control Difficult Functions. Helps Concentrate On Core Functions.

19. Disadvantages of Service Outsourcing/Off-shoring Operational Risks  Risks show up as slippages on time, cost and quality. Strategic Risks  Risks are rooted in deliberate, opportunistic behavior by service providers or their employees. Composite Risks  Risks are when a client company has outsourced a process for so long that it can no longer implement the process for itself.

20. Total Cost Of Outsourcing CPP = Cost Paid to Provider (money billed per hour) ABC = Additional Buyer Costs (expenses for a successful project) PAC = Performance Associated Costs (quality reliability etc.)

21. 5 Practices For Better Outsourcing Go Off-shore For The Right Reason Choose Outsourcing Model Carefully Get People On Board Need To Invest Time & Effort Treating Off-shore Partners As Equal

22. www.themegallery.com Outsourcing Chapter-2

23. Constraints Web 2.0 Change Outsourcing Chapter-2

24. 9 Critical Chapter-2 Outsourcing shifts From To Limited Access Virtually unlimited access to collective wisdom and market intelligence Procurement Relationship management as the Holy Grail Process People as the center of the outsourcing universe Mostly closed IP Mostly open IP/more sharing Low Price Best Value Static Dynamic, Actionable, interactive content and IP and data Hunting Shopping Betting Investing Medication Gratification

25. EFFECT OF WORLD OIL PRICE ON OUTSOURCING Constant Rise In World Oil Prices Since 2004 Price Pushing Towards $150 Per Barrel Effects Of World Oil On Companies Bottom Lines Countries Where Outsourcing Is Headed

26. www.themegallery.com Thank You !