Is4632 outsourcing strategies (final) (5)


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  • Business Process Off-shoring (BPO)
  • Outsourcing considerations: Why India?
  • Outsourcing considerations: Scale and Quality of the Workforce
  • In the “30 Attack Destination Countries” Outsourcing considerations: Risk Profile & Law and Policies
  • Outsourcing considerations: Opportunities for Banking Industries
  • Outsourcing considerations TCS: Size, Financial strength
  • TCS’ Banking and Financial Service BPO offerings include the following:Securities ProcessingMortgage ProcessingCredit Card ProcessingFund AccountingPayment ProcessingInvestment Banking SupportTCS provides customized solutions to banks and financial institutions by offering a wide range of products, including the following:SecuritiesMutual FundsFund AccountingCredit CardsConsumer AssetsBankingCashTradeWealth Management
  • Is4632 outsourcing strategies (final) (5)

    1. 1. 1<br />Sourcing Strategies<br />Leo Kwok40034280<br />Gaargi Sharma51485416<br />XING Sang, Shania 51159740<br />Tsang Wan Ching, Venice 51466936<br />Kwok SiuChun,Vincent 51442023<br />
    2. 2. Agenda<br />2<br />Introduction<br />Process outsourced by Citigroup<br />Decision making process<br />Outsourcing considerations<br />Risk involved<br />Comparison of expected outsourcing strategies & real situation<br />Competitive Advantage brought by outsourcing<br />Recommendation<br />Conclusion<br />
    3. 3. 3<br />What is outsourcin ?<br />Outsourcing<br />The practice of contracting out a business function previously performed in-house to an external provider<br />
    4. 4. 4<br />Business Process Off-shoring (BPO)<br />Subset of outsourcing<br /><ul><li>Involves the contracting of specific business operations/functions to a third party</li></ul>Comprised of two methods of outsourcing<br />Nearshoring<br />Outsourcing to nearby foreign countries<br />Offshoring<br />Outsourcing to distant foreign countries<br />
    5. 5. 5<br />Reasons to outsource<br />Cost advantages<br />Focus on core competencies<br />Improve overall efficiency<br />Increase customer satisfaction<br />Gain competitive advantage<br />
    6. 6. 6<br />Outsourcing Lifestyle Model<br />Building block 1<br />Investigate<br />Building block 2<br />Target<br />Building block 9<br />Refresh<br />Building block 3<br />Strategize<br />Building block 8<br />Manage<br />Building block 7<br />Transition<br />Building block 4<br />Design<br />Building block 5<br />Select<br />Building block 6<br />Negotiate<br />
    7. 7. 7<br />Citigroup Inc.<br />American multinational financial services company based in New York City.<br />Formed from one of the world’s largest mergers in history by combining Citigroup and Travelers Group together on April 7th, 1998.<br />Over 200 million accounts spanning 140 countries.<br />Primary dealer in US Treasury securities.<br />One of the “Big Four Banks”<br />
    8. 8. 8<br />Citigroup and Tata Consulting Services<br />Tata Consulting Agency acquires Citigroup Global Services for $505 million on Oct. 8th, 2011.<br />$2.5 billion contract providing outsourcing services, application development, and infrastructure support to Citigroup and its affiliates for the next 9.5 years.<br />
    9. 9. 9<br />Processes outsourced by Citigroup <br />
    10. 10. Processes outsourced by Citigroup <br />10<br />CGSL services five of Citigroup’s nine product lines in more than 45<br />countries:<br />
    11. 11. Processes outsourced by Citigroup(Con’t)<br />11<br />
    12. 12. 12<br />Decision making process for outsourcing<br />
    13. 13. 13<br />The decision making process I<br />Why does Citigroup choose to outsource?<br />“If you don’t do it, you won’t survive.”<br />-Daniel Marovitz,2006<br />
    14. 14. 14<br />The decision making process II<br />Indentify sourcing strategy :<br />Offshore outsourcing<br />Choose which function to be outsourced:<br />BPO Non-core competencies<br />Select outsourcing service providers<br /> -Country<br /> -Company<br />
    15. 15. 15<br />The decision making process III<br />Outsourcing considerations - Country selection <br />Lower labor rates ?<br />Culture?<br />Gvmt policy?<br />Regulation?<br />Citi<br />Risk involved?<br />Sufficient supply of qualified labor?<br />
    16. 16. 16<br />The decision making process IV<br />Service Provider selection & evaluation I<br /> Does the SP <br />Have the ability to fulfill detailed business requirements of Citigroup<br /><ul><li>Tangible resources (e.g. robust IT infrastructure, equipment )
    17. 17. Intangible resources (e.g. talent, human resource)</li></ul>Have relevant experience in providing the required services <br />
    18. 18. 17<br />The decision making process V<br />Service Provider selection & evaluation II<br />Does the SP <br /><ul><li>Have satisfactory performance track record in providing similar services
    19. 19. Have financial strength to take the engagement and compliance to requirements
    20. 20. Large in size-have a group chunky enough to amortize physical cost
    21. 21. Have good reputation and social recognition Goodwill</li></li></ul><li>18<br />Outsourcing Considerations<br />
    22. 22. 19<br />Outsourcing considerations: Why India?<br />Mature Outsourcing Market<br />
    23. 23. 20<br />Outsourcing considerations: Cost<br />
    24. 24. 21<br />Outsourcing considerations: <br />Scale & Quality of the workforce<br />
    25. 25. 22<br />Outsourcing considerations: Infrastructure<br />
    26. 26. 23<br />Outsourcing considerations: Risk Profile & Law and Policies<br />India counts 0.48% ranked 23rdfor the vulnerability of security attack while China ranks second at 12%.<br />The penalties for defiance of laws are high. <br />Legal contracts are based on- buyer country, seller country and international legal systems. <br />Everyone tries to minimize uncertainty & reduce transaction costs. Lack of confidence makes it difficult for contract setting up.<br />
    27. 27. 24<br />Outsourcing considerations: Opportunities for banking industries<br />
    28. 28. 25<br />Outsourcing considerations: Why TCS?<br />
    29. 29. 26<br />Outsourcing considerations TCS: Size, Financial strength<br />A part of the Tata Group<br />India’s largest industrial conglomerate, TCS has over 116,000 of the world's best trained IT consultants in 50 countries.<br />Financial strength to take the engagement and compliance to requirements <br />The company generated consolidated revenues of US $5.7 billion for fiscal year ended 31 March 2008 <br />
    30. 30. 27<br />Outsourcing considerations TCS: Relevant experience<br />Involved in Banking and Financial Services BPO for three decades. <br />Worked with leading banks and financial institutions like Deutche Bank, Royal Scotland Bank, HSBC Bank, etc.<br />Ability to fulfill detailed business requirements of Citigroup in terms of its physical assets (e.g. robust IT infrastructure ) and human resources (e.g. talents pool)<br />
    31. 31. 28<br />Outsourcing considerations TCS:Company Fame<br />
    32. 32. TCS had much of what Master calls ‘the soft infrastructure’ in place—English capabilities, a cultural and business affinity with its Western customers, rule of law,”<br />29<br />
    33. 33. 30<br />Risk involved<br />
    34. 34. Risk involved & risk management I<br />31<br />Loss of control<br />Implement and execute procedures to: <br /><ul><li>Ensure that all vendors under its control are performing in accordance with contract and performance expectations</li></ul>Inconsistency in<br /> controlling<br />Assure that the controls over outsourced information and transaction processing activities are equivalent to those that would be implemented if the activity were conducted internally<br />
    35. 35. 32<br />Risk involved & risk management II <br />Over-dependence (“over-trust”) on the vendor <br />Incomprehensive<br />contract<br /><ul><li>Conduct reviews of the service provider
    36. 36. Implement multiple checks & balances</li></ul>Ensure the contract including Exit Strategy<br />(end-to-end process) <br />
    37. 37. 33<br />Comparison betweenexpectation & real situation<br />
    38. 38. Expected sourcing strategies for Citigroup I<br />34<br />
    39. 39. Expected sourcing strategies for Citigroup II<br />35<br />
    40. 40. Real situation between Citigroup & TCS<br />36<br />
    41. 41. Real situation between Citigroup & TCS<br />37<br />Citigroup was …<br /><ul><li>Able to keep its core competencies & strategic systems
    42. 42. Able to maintain long-term relationship with its outsourcer
    43. 43. Able to rely on a single vendor: TCS
    44. 44. Able to find TCS to offer better service with a lower cost
    45. 45. Unable to find TCS to take over its worst IT staffs</li></li></ul><li>38<br />Competitive Advantages<br />
    46. 46. Competitive Edge brought<br />39<br />
    47. 47. Summary of Citi’s outsourcing strategy<br />40<br />
    48. 48. Citigroup’s vendor management<br />41<br />
    49. 49. 42<br />Recommendation<br />
    50. 50. Recommendation<br />43<br /> Cost is not the only factor to be considered when outsourcing<br /> Contract should include the ability to shift the focus towards enhancement and innovation<br />Buyer organizations should use a structured, strategic approach to calculate the true costs of outsourcing<br />They should include favorable transition clauses in the contract<br />Should have vendor management measures<br />
    51. 51. 44<br />Conclusion<br />
    52. 52. Conclusion<br />45<br />There are internal and external reasons in outsourcing<br />A few factors are needed to be considered while considering outsource<br />A risk is always involved in outsourcing so a control mechanism is needed<br />When doing outsourcing right, it could bring business values to the company<br />
    53. 53. 46<br />