The document discusses the economic effects of outsourcing around the world. It provides an overview of outsourcing, including its benefits of cost savings but potential disadvantages of losing control. India is discussed as a major destination for outsourcing due to its large skilled workforce and lower costs. Specific industries that outsource functions to India are outlined. Both positive and negative impacts of outsourcing on India, other nations, and the US are summarized.

2. India

3. India
The Economic Effects of Outsourcing

4. Outsourcing Around the World
• Contracting with another
company/person to do
particular function
• Almost every organization
outsources
• Function being
outsourced = non-core to
business
• Outside firms providing
!
This informa,on came from The
outsourcing services Outsourcing Ins,tute, a company
service providers that helps other companies find
outsourcing op,ons.

5. Outsourcing Around the World
• Crucial aspects of business
should probably not outsource
• Cash-flow management and
customer interaction
• Biggest benefit: saves you money
• Depends company size and
what is outsourced
• Disadvantage: Putting part of
company in someone else's
hands
• Trust, ability to adapt are key

6. Outsourcing Around the World
• Smart outsourcing can juice
performance of established
players
• Firms are learning to
capitalize on global talent
pools to rush products to
market sooner at lower costs
• Aggressive outsourcers using
low-cost, efficient business
models to challenge
incumbents
• With low-cost engineers,
financial analysts, consumer
marketers, architects now
readily available via Web,
CEOs see quicker benefit

7. British Occupation
• 1773, India = semiofficial agency of
Britain
• Britain slowly overtook the entire
subcontinent
• East India Company given complete
control
• Britain caused quick modernization
• Telegraphs, railroads, roads, and
postal services
• India natives fear modernization
• Sepoy Rebellion causing British
crown to take control

8. British Occupation
• Many rebellious groups
formed
• Indian National Congress
main rebellion group
• England tries to reform to
counteract the rebellions
• Gandhi starts silent
rebellion
• August 15, 1947: Indian
Independence

9. Beginnings of Outsourcing
•
Companies realized
that India had highly
trained workers, low cost
structure, English language
skills
•
Two things happening making
outsourcing to India optimal:
1) Indian government policy
became friendlier to
entrepreneurial companies
2) Satellite and fiber optic
communication improved
dramatically between
English speaking countries
and India

10. Outsourcing in India
• India = vital destination for
outsourcing
• Rapidly growing industry
• Grew at the rate 38% in
2005
!
Indian workers for the Canadian
company Bombadier

11. Outsourcing in India
• 75% of US and European
multinational companies
use outsourcing to
support financial functions
• 71% of European
compaines and 78% of
U.S. companies plan to
keep services within next
12-24 months
• 29% of US and European
companies expect to
increase use of
outsourcing of financial
functions

12. Assignments Outsourced to India
• Business Process Re-
engineering
• E-Commerce
• System Migration
• Maintaining Legacy
Systems
• System Integration
• Telemarketing

13. Familiar Companies
• Oracle
• CITIBANK
• Hewlett Packard
• JP Morgan
• Schlumberger
• GE Capital
• ATT Wireless
• Dell Computer Support
• Texas Electronics
• Mastek Limited
• TransUnion
• Orcim Soft, Inc.
• Rand McNally

14. Outsourcing
Main advantages of India
as an outsourcing
destination:
• Flexibility
• Technological competence
• Quality output
• Cost control facilities
• Time-to-market

15. Positive Impacts of Outsourcing in India
• Approximately 230,000 new jobs are created
each year
• Integration of people
• Highly skilled people outsource in poorest
areas
• Outsourcing brings investment and support to
poor areas
• Improves economy
• Build jobs and maintenance of infrastructure
• Opportunities and recognition from
multinational corporations.

16. Negative Impacts of Outsourcing in India
• Exploit the poor
• Significantly underpay workers
• Forced into culture
• Must adapt American names
and take Americanizing
classes
• Disregard for Indian holidays

17. Positive Impacts on Other Nations
• Beneficial to some nations,
especially if developing and
do not possess ability to
produce own goods
• Outsourcing allows access
to low price products, such
as former Soviet states
• States also attempting to
get into the outsourcing
market

18. Negative Impacts on Other Nations
• Outsourcing can hurt nations that
have been historically manufacturers
• Germany and production of
chemicals
• Industrial Revolution
• Germany became Europe’s
leading producer of
commercial chemicals
• Wages increase and
regulations become stricter,
German companies began to
take jobs elsewhere
• Putting many people out of
work

19. Positive Impacts on USA
• Allows customers to
purchase goods for less,
• Allows stores (Wal-
Mart) to sell massive
amounts of goods
produced outside of
United States
• Allows common consumer
to purchase more goods
on same amount of
income, increasing the
happiness of average
American consumer

20. Negative Impacts on USA
• Outsourcing takes away
manufacturing jobs in U.S.
• Leads to increased competition
for remaining jobs left,
• People without education have
difficulty finding job
• To compete with outsourced
jobs, domestic companies must
cut wages or other benefits to
keep costs low
• Must be more efficient than
counterparts

21. Social Reactions in USA
• Strong public opinion
against outsourcing
• Supporters draw on
mainstream economies to
argue that outsourcing
should bring down prices,
providing greater economic
benefit to all

22. http://www.hulu.com/watch/194372/
outsourced-whats-thanksgiving#s-p5-sr-i1

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