Outsourcing concept, goals and objectives
key areas of outsource, why to outsource, supplier selection, objective, types. advantage. disadvantage, goals, factors
This is topic one of a short open course on outsourcing this first session covers the basic ground of the rationale and history of outsourcing. It is accompanied by a guide and course notes on the www.1stoutsource.com website.
Outsourcing concept, goals and objectives
key areas of outsource, why to outsource, supplier selection, objective, types. advantage. disadvantage, goals, factors
This is topic one of a short open course on outsourcing this first session covers the basic ground of the rationale and history of outsourcing. It is accompanied by a guide and course notes on the www.1stoutsource.com website.
A presentation on various types of outsourcing other than BPO. It will give a brief explanation about various outsourcing sectors, how it is done and for what purpose.
Moving the intellectual competence and operational dynamics of a firm to the hall of excellence wherein every key player and work process fit into intelligence best practices.
A presentation on various types of outsourcing other than BPO. It will give a brief explanation about various outsourcing sectors, how it is done and for what purpose.
Moving the intellectual competence and operational dynamics of a firm to the hall of excellence wherein every key player and work process fit into intelligence best practices.
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Outsourcing - Key Management Challenges, An India-specific analysis of the outsourcing industry and the key challenges that it faces. Part of a report that was submitted as a part of a credit course at IIT Madras.
Effective governance is a critically important enabler in achieving “top performer” status. “Governance” is the third topic in a supply chain learning series presented by ScottMadden and Shared Services & Outsourcing Network (SSON). In this session, we focus on the key building blocks of effective supply chain governance models including decision rights, performance metrics, service level agreements, and issue escalation/resolution. In addition, we discuss how to create alignment across an enterprise for a consistent supply chain strategy that clearly differentiates transactional efficiency from higher-value, strategic activities.
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Outsourcing in literal terms, means sourcing from outside. The term is increasingly used to refer to sub-contracting of a set of functions or processes by one firm to another, or to a group of individuals. Outsourcing is being pursued as an active business strategy in the current economic scenario, since it enables a firm to focus on core-competency areas. It also frees the firm from resource and labour intensive functions, which are now performed by trained personnel at much lower costs.
ISHIR White Paper - It is Time to Switch Your Offshore Outsourcing VendorISHIR
As more and more companies are sharing dissatisfaction with their existing software development outsourcing arrangements, companies are evaluating risks and rewards of switching outsourcing vendors. When switching outsourcing providers significant risks can be avoided or minimized if best practices are followed.
Regulatory Affairs Outsourcing Considerations and ModelsPaul Kuiken
I present a number of issues which are being considered by all organisations in the healthcare, pharmaceutical, biotechnology, and clinical sectors. I presented this to an audience at an outsourcing summit and have tailored this to a more general audience.
I am happy to receive your comments and provide your insights to whether you agree or not with my points or to hear from you regarding your experiences of outsourcing in whatever sector you are interested in.
Application sourcing focused on value, not cost aloneWGroup
As part of a four year transformation strategy to replace its aging technology stack, strengthen their expertise and reduce the total cost of ownership, a $12 billion US-based organization was seeking a solution that would resolve problems they were experiencing in the delivery of their applications development, maintenance and support functions. In this case study, WGroup facilitated the outsourcing RFP process with service providers so the client could evaluate partners based on value-creation capabilities, and not on cost alone. The resulting outsourcing contract implemented drove a metric-driven organization, measurable operational improvements, and expanded the service catalog of the IT organization.
Compliagent is a consulting firm with a singular mission – guiding our healthcare provider clients in designing, managing and maintaining compliance infrastructure.
Serving over one-hundred healthcare facilities, providers, and business associates, we view compliance as an opportunity to partner with our healthcare provider clients to mitigate regulatory risk proactively and to build stronger organizations in a cost-effective way, ultimately leading to profitability increases and cost savings.
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
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Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
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2. Learning Objectives
At the end of this programme, participants
should be able to do the following:
Identify outsourcing as an alliance strategy
Implement outsourcing process in a firm
Develop outsourcing strategy
Conduct effective management of a firm’s
outsourced services
3. What is Outsourcing?
“Outsourcing is a type of business alliance in
which an organisation set up contract with a
service provider, with the aim of driving a
feasible framework for the service provider to
take charge of a set of processes or function
within it, in order to enhance corporate
performance.”
Source: Elijah Ezendu, Outsourcing
4. Alliance
Alliance is definite agreement
between firms such that each shall
commit resources to achieve
common set of objectives.
5. “Alliances are institutional arrangements
which combine resources and
governance forms of several partnering
organisations, making them mutually
interdependent.”
Source: Inkpen
6. i. Define business vision and strategy in order
to understand how alliance fits stated
objectives.
ii. Evaluate and select potential partners based
on synergy and ability to work together.
iii. Develop working relationship and mutual
recognition of opportunities with prospective
partner.
iv. Negotiate and implement formal agreement
that includes systems to monitor
performance.
Alliance Methodology
7. i. Shortened product life-cycle.
ii. Globalization of competition
iii. Entry restriction
iv. Focus on increasing cost efficiency
v. Neoinstitutionalism for imitation
vi. Development of Regional Economic Bloc
vii. Scarce Resources
viii.Culture
ix. Increased specialization of skills and capabilities
especially in high technology businesses.
x. Boundaries of Industries are becoming hazy
xi. Focus on core-competencies
xii. Best-in-class industry practices
Reasons Why More Organizations form Alliance
10. Short
Long
None High
DurationofCommitment
Extent of Joint Decision-Making
One-off arms
length purchase
Competitive
Suppliers
Joint R & D
Preferred
Suppliers
Co-Marketing
Joint Production
Equity Joint
Ventures
Mergers
&
Acquisition
Full Integration
Alliance
Market Exchange
Minority
Investment
Types of Inter-Firm Relationships
Outsourcing
11. Outsourcing: A Central Alliance
Joint R & D
Preferred
Suppliers
Co-Marketing
Joint Production
Equity Joint
Ventures
Minority
Investment
Outsourcing
DurationofCommitment
Extent of Joint Decision-Making
Long
Short
None High
Source: Elijah Ezendu, Alliance Development
12. Practices Related to Outsourcing
• Insourcing: The reassignment of an outsourced
function to a department, unit or section of a firm,
for 100% in-house management by employees.
• Heresourcing: Assigning a function or process to a
service provider within the same country.
• Captive Offshoring: Assigning a function or process
to overseas service provider that’s either an affiliate
or partly owned by service user.
• Offshore Outsourcing: Assigning a function or
process to overseas service provider.
13. Why Organisations Prefer Captive Offshoring to
Generic Offshore Outsourcing
i. To gain from service development
ii. To be involved in building capability of service
provider
iii. To explore and exploit competitive national
advantage
iv. To gain from the arithmetic of asset ownership
v. To ward off managerial uncertainties in
commitment of service provider
14. Key Drivers of Outsourcing
• Vertical Disintegration
• Search for Higher Cost Efficiency
• Unbundling of corporate functions
• Focus on Core Competencies
• Scarcity of Required Skills and Capabilities
• Best-in-class industry practices
15. Two Types of Outsourcing
Adapted from Mari Sako, Business Service Offshoring
16. Outsourcing Capability Maturity Model
Key Features
Strategy Management
Governance Management
Relationship Management
Value Management
Organisational Change Management
People Management
Knowledge Management
Technology Management
Threat Management
Sourcing Opportunity Analysis
Sourcing Approach
Sourcing Planning
Service Provider Evaluation
Sourcing Agreements
Service Transfer
Source: Dian Schaffhauser, Outsourcing Best Practices
Ranking Firms
Level 1: A firm performs sourcing without
input of best practices.
Level 2: A firm is not only doing sourcing, but
consistently manages it and follows a set
of procedures.
Level 3: A firm has established clear
standards, objectives and strategy for
outsourcing.
Level 4: A firm leverages on outsourcing for
adding value.
Level 5: A firm consistently operate at level 4
for about two years.
19. The Outsourcing Strategy must have a high level
of interoperability with the Corporate Strategy
and Competitive Strategy of the Business
Portfolio.
Interoperability of Outsourcing Strategy
20. Using McKinsey 7S Framework for Testing Outsourcing Strategy
Style
Staff
Shared Values/
Subordinate Goals
StructureSystems
Strategy
Skills
21. Action Points for Testing Outsourcing Strategy
• Examine each of the 7S.
• Identify the key success factors of each ‘S’.
• Ascertain the gap between the elements and
the strategic fit.
• Solution should be either to amend the
elements accordingly or to alter the
outsourcing strategy.
22. Aligning Outsourcing Strategy to Business Model
It’s imperative to align Outsourcing Strategy to a
firm’s Business Model due to its role. Business
Model is the logic behind value generation.
The Business Model binds Business Strategy
and Business Process together and functions
as link between them. The focus of strategy is
determination of position and codification of
aims and objectives, while business process
captures and implements the strategy.
23. Identification of Outsourcing Opportunity
Outsourcing opportunity should be identified
based on the direction and structure of
outsourcing strategy. Consideration should
differentiate rightsourcing targets from core
competence and residual processes.
Thereafter, key components of rightsourcing
targets shall be isolated for comprehensive
evaluation.
24. Evaluation
• Evaluation of Barriers
• Evaluation of Risks
• Evaluation of Business Transformation
Indicators
25. Barriers to Outsourcing
i. Employee Issues
ii. Customer Connectivity
iii. Importance of process
iv. Fear of Insecurity
v. Fear of Losing Control
vi. Loss of Flexibility
27. Business Transformation Indicators
• Higher Cost Efficiency
• Availability of More Funds for Business
• Opportunity to Increase Capabilities
• Superior Business Focus
• Prospect for Competitive Repositioning
• Greater Shift to Customer-Facing Activities
• Reduction of Internal Rivalry for Fund
• Better Management of Problematic Function
• Reallocation of Internal Resources to Higher Value
Purposes
28. Criteria for Selection of Service Provider
• Fee
• Independence
• Expertise of Firm
• Expertise of Key People
• Finance
• Experience
• Flexibility
• Culture
• Integrity
• Staff Requirement
• Operational Facility
29. Importance of Due Diligence
In a large scale outsourcing programme,
comprehensive due diligence of the
prospective service provider must be done to
ensure clear-cut identity and clarify suitability.
30. Negotiation
The outsourcing team must aim at reaching an
acceptable point between the firm’s position
and that of the prospective service provider.
Team members must be well trained in
advanced negotiation skills which are required
for the tasks.
31. Service Level Agreements
“Service level agreements validate expectations
of the respective parties and set parameters
for measuring project success. This important
tool helps determine value and define success
and discourages potential disagreements.”
Source: Syntel
32. Schedule of SLA
Service Level Agreements commonly set out provisions for the
following:
• Service definition
• Timing standards
• Minimum and maximum quality needs
• Compliance with set standards
• Payment (incentives and rebates)
• Consequences for performance drops
• Current and Future needs
• Monitoring methods
• Security of premises and information
• Alternative dispute resolution
• Variation of arrangements
Source: Noric Dilanchian, Hints for Service Level Agreements
35. Merits of Face-to-Face Meetings in
Nurturing Outsourcing Relationships
• Physical Proximity
• Multiple Modalities
• Vocal Inflection and Timing
• Real-Time Question and Answer
36. Staffing Models in Outsourcing
Product Vendors: These are service providers who focus on
selling deliverables. They are assigned to staff functions and
report to an executive, who ensures fulfillment of SLAs.
Temporary Employees: These are flexible workers used for lower
level and short-term jobs.
Project Employees: These are workers obtained for a specific
project, and their contracts terminate at the expiration of the
project.
Long-Term Contract Employees: These are employed by a
service provider and assigned to a firm. They are the closest
to full staff of a firm.
37. Problems with Staff Extension
• Control of strategic evolution
• Improper supervision due to shortage of skill
in cases of scarce competencies
• Abandonment of competency development in
the area being outsourced
• Service provider may end up as problematic
decision –maker for the firm
• Tendency to continue reducing staff strength
because of cost savings
38. Using Technology For Driving Outsourcing
The complexity of multiple outsourcing
relationships can be solved by infusion of
technology enablement. Suitable software for
Business Process Management that highlights
SQL, ERP and other intelligence systems can
provide the requisite leverage to track,
identify, monitor, and analyse service
provider’s performance. Example of such
software is Ajira.
39. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise
in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Turnaround
Management, Business Development, Marketing, Project & Cost Management, Leadership, HR, CSR, e-
Business & Software Architecture. He had functioned as Founder, Initiative for Sustainable Business
Equity; Chairman of Board, Charisma Broadcast Film Academy; Group Chief Operating Officer, Idova
Group; CEO, Rubiini (UAE); Special Advisor, RTEAN; Director, MMNA Investments; Chair, Int’l Board of
GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training),
Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management
Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead
Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited;
Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles),
Fortuna, Gambia & Malta; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping;
Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria;
Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic
Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria;
Country Manager (Nigeria) & Adjunct Faculty (MBA Programme), Regent Business School, South Africa;
Adjunct Faculty (MBA Programme), Ladoke Akintola University of Technology; Editor-in-Chief, Cost
Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of
Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business
Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He is Innovator of
Corporate Investment Structure Based on Financials and Intangibles, for valuation highlighting
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