amity -global delivery modle

8/4/2019 AMITY -Global Delivery Modle

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Out sourcing decisiona

strategic frame work

AMITY


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Out sourcing decisiona strategic

frame work

The nature of out sourcing is divers from:

Core production activities.

In-boundout bound logistics.

Secondary value chain activities. IT, accounting, distribution,HR R&D.

Goal:

Maximizing the net benefits versus in-house provision of

value chain activities.

Risk:

Placing part of its destiny in the hands of others.


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Frame work for assessing benefits

of outsourcing

Cost from the firms perspective:

Specific governance costs associated with

outsourcing:

Three major determents of outsourcing:1. Costs.

2. Product/activity complexity.

3. Contestability and assets specificity.

Set Standards for each potential outsourcing

situations:


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The benefits from outsourcing:

Objective: Create value for share holders.

Lower the purchase price of some inputs taking

advantage of external suppliers lower cost.

Improve the quality of some inputs by purchasing

superior capabilities from an external supplier.


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Cost reducing rationales from

outsourcing

Compare cost with internal production of

activities.

Too low,

inefficient,

large fixed capital costs into variable costs,

New product generations happens quickly atlow cost and greater capacity utilization.


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outsourcing

Organizational cost factors:

Large multiunits organizations-internal units

are often price in-efficient.

Govt. laws and regulations.

Agreements with unions.


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outsourcing

Firms capabilities that are difficult to imitate

are the key to sustainable competitive

advantage.


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outsourcing Direct purchase cost savings or superior

resources may be off-set in increase in

governance costs.(Any cost other than

production & purchase costs).


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Two distinctive type of

governance costs:Bargaining costs.

Contract negotiation costs,

Post contract negotiation costs,

Contract monitoring costs,

Disputes costs.


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Two distinctive type of

governance costs:

Opportunism costs:

Change the agreed terms of a transaction,

(one party acts self-interestingly but in badfaith)


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PRODUCT/ACTIVITY COMPLEXITY:

Complex goods involved uncertainty about the

nature and cost of production process itself.


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ASSETS SPECIFICITY:

Specific asset is one that has much lower value

in any alternative use.

Physical assets ,

Location,

Human assets specificity,

Dedicated assets.


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OUTSOURCING SITUATONS

Outsourcing situations and some possible

strategies:

Action:

Address bargaining and opportunism (during

or post contracting) costs at contracting stage.


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OUTSOURCING SITUATIONS

Various combinations of product complexity:

Low product/activity complexity and low asset

specificity:

This combination provides clearest case of outsourcing. It encompasses many standard products, services and activities required

by the firm.

The outsourcing firm has or easily acquire sufficient knowledge and

information to specify contract terms precisely (as there is low uncertainty

about priceperformance characteristics) with low asset specificity(andresulting high contestability) inefficient and opportunistic external

suppliers can be quickly replaced.


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OUTSOURCING CITUATIONS

Low product/activity complexity and high asset specificity:

Given low complexity ,problems associated with high assets specificity

almost certainly involves high temporal or location specificity.

There are likely to be few efficiency cost arising from high physical assets

specifically when the outsourcing firm makes the specific investmentsitself, as given this ownership it is not costly to replace the external

suppler (given high contestability)

One way of avoiding these problem is for the outsourcing firm to Own

the specific asset and to rent it or lease it to the external firm.


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OUTSOURCING SITUATIONS

High product/activity complexity and low asset

specificity:

This configuration perhaps best characterizes

the supply of wide range of services or

activities that are potentially outsourcable to

professionals.


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OUTSOUCING SITUATIONS

High product/activity complexity and high asset

specificity:

The important different between this situation and the

second case discussed above is that Reliance on arbitration orthird party contract enforcement procedure is more

problematic, because it is more difficult for a judging third

party to identify whether contract breach has occurred.

Solution: Outsourcing firm provides external suppliers with higher than

normal profit that they can expect to earn indefinitely in the

absence of a verified contract breach


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Overall frame work emphasize the

following steps: Formulate consistent expectations about the uncertainties

surrounding the potential transactions at all stages of contract

formulation and implementation.

Identify the potential opportunism at different stages of

contract formulation.

Identify contract provisions to attenuate opportunism and

assess the consequences of the preferred strategies for the

overall efficiency of outsourcing versus internal production.

Implement the relevant strategies prior to initiation of

outsourcing.


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Ranking of cities

The annual survey conducted by the

Datamonitor Group:

Asked 3,100 corporate development leaders,

including more than 400 outsourcing

customers, to indicate their company's

inclination to consider specific offshore

locations for outsourcing (including IToutsourcing and BPO).


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Ranking of cities

The ranking of cities on various perceived threatsand weaknesses, including :

Geopolitical risk,

Terrorist threats, Climate concerns,

legal maturity,

environmental waste and pollution, IT and telecom infrastructure security,

Crime rates.


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Ranking of cities

The 25 Riskiest Cities for Offshore Outsourcing in 2010

1. Karachi, Pakistan

2. Medellin, Colombia

3. Juarez, Mexico 4. Cali, Columbia

5. Tijuana, Mexico

6. Lahore, Pakistan

7. Jakarta, Indonesia 8. Lagos, Nigeria

9. Dhaka, Bangladesh

10. Chittagong, Bangladesh


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Ranking of cities

11. Amman, Jordan

12. Khulna, Bangladesh

13. Faisalabad, Pakistan

14. Rawalpindi, Pakistan

15. Port-au-Prince Haiti

16. Managua, Nicaragua

17. Chihuahua, Mexico

18. Ljubljana, Slovenia

19. Tashkent, Uzbekistan

20. Bandung, Indonesia

21. Kingston, Jamaica

22. Tel Aviv, Israel 23. Colombo, Sri Lanka

24. Johannesburg, South Africa

25. Accra, Ghana


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Ranking of cities

The 25 Safest Cities for Offshore Outsourcing in 2010

1. Prague, Czech Republic

2. Warsaw, Poland

3. Brno, Czech Republic

4. Krakow, Poland

5. Toronto, Canada

6. Halifax, Canada

7. Singapore, Singapore 8. Dublin, Ireland

9. Kiev, Ukraine

10. Chennai, India


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Ranking of cities

11. Pune, India

12. Wuxi, China

13. Monterrey, Mexico

14. Sao Paolo, Brazil

15. Bangalore, India

16. Beijing, China

17. Santiago, Chile

18. Brasilia, Brazil

19. Mumbai, India

20. Dalian, China

21. Chandigarh, India

22. Rio de Janeiro, Brazil 23. Cebu City, Philippines

24. Kuala Lumpur, Malaysia

25. Kolkata, India


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Outsourcinglessons from

regulators The provision of outsourced business services is not, of course, a regulated

industry.

But many clients of outsourcing service providers are themselves in

regulated industries indeed arguably the greatest take up of outsourced

(and offshore) business process services has been in regulated industries

such as financial services and utilities.

Regulators have therefore taken a keen interest in the implications of

outsourcing and offshoring for their members, particularly with regard to

operational risk and the potential impact on their customers.


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regulators

Other industry sectors can learn a great deal

from the way the regulators have addressed

this issue their guidelines are pretty close to

a good practice summary for any outsourcingarrangement in any organisation.


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regulators Take the UK Financial Services Authority Handbook which has

recently incorporated additional requirements due to the new

European-wide Markets in Financial Instruments Directive

(MiFid).

This sets out standards that any organisation should meet in

their outsourcing arrangements. A few pertinent examples are

summarised below, with comments in brackets:


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regulators

The need for a written contract setting out the

respective rights and obligations of the client

and the service provider (one would hope that

most organisations have understood this bynow.)

Robust governance arrangements in place (the

g word is now of course the current hottopic in the outsourcing world)


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regulators

No delegation of senior personnels

responsibility (i.e. outsourcing is a means of

delivering, not an abdication of responsibility)


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regulators

Service provider must have the ability and

capacity to perform the services professionally

(and therefore the client is responsible for

carrying out the due diligence to find out ifthey have)


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regulators

Client must establish methods for assessing

the standard of performance of the service

provider (so no more SLAs which never get

monitored or even drafted)


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regulators

Client must retain the necessary expertise to

supervise the outsourced functions effectively

(which means that the work can not just be

thrown over the fence)


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regulators

Client must have the right to terminate where

necessary (note this is a right, which means

it must be addressed in the contract)


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regulators

Contingency plans for disaster recovery must

be in place and be periodically tested (no

good just having vague assurances in the

contract).


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regulators

And so it goes on. Whether or not these

standards are generally adhered to in the

outsourcing arrangements in place in the

financial services industry is a question forthose organisations, the FSA and other

regulators.


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regulators

But regardless of this, the questions these

standards raise apply equally to any significant

outsourcing of what the FSA calls critical and

important functions (which would certainlyinclude IT, Finance and HR) in any industry.


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GLOBAL DELIVERY MODEL

GDM is typically associated with companies

engaged in IT consulting and services delivery

business and using a model of executing a

technology project using a team that isdistributed globally.


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GDM

GDM focus on the technical skills, process

rigor, tools, methodologies, overall structure

and strategies for seamlessly delivering IT-

enabled services from global locations."


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GDM

This model of delivery to signify one or more

of the following value propositions they bring

to their customers:

A global presence ensures an understanding

of the local language and culture wherever

they may be present, which is seen to be an

advantage when trying to understandcustomer requirements.


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GDM

A global presence implies that the

organization has access to resources of varying

costs that allows it to deliver services to its

customers at an optimal cost, typically a mixof costlier 'on-site' resources combined with

cheaper 'offshore' resources.


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GDM

A global delivery model implies that

potentially, a firm can work round the clock

for its customer, handing off work from one

location to another at the end of the 'dayshift' ('follow the sun' model) - thus providing

twice or even three times the capacity they

would have if they worked in a single location/time-zone only.


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GDM

Global locations also provide some degree of

'risk-proofing' a customer from natural or

man-made disasters such as flooding,

earthquake or political unrest - causingdisruption in one place.


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GDM

In case of such events, a global company could

presumably transfer work to another location

where the situation is normal, thus ensuring

that work did not get delayed for the client.


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Infosys

Infosys pioneered the Global Delivery Model

(GDM) to ensure the distribution of

application and business process lifecycle

activities and resources, while ensuring theirintegration.

The key drivers of our Global Delivery Modelare:


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Infosys

Processes

Our robust process-orientation allows us to

deliver solutions from multiple locations.

Quality

We deliver world-class solutions by

maintaining quality across processes,

interfaces and outputs, in management, core

and support processes.
http://www.infosys.com/global-sourcing/global-delivery-model/Pages/processes.aspxhttp://www.infosys.com/global-sourcing/global-delivery-model/Pages/quality.aspxhttp://www.infosys.com/global-sourcing/global-delivery-model/Pages/quality.aspxhttp://www.infosys.com/global-sourcing/global-delivery-model/Pages/processes.aspx


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Infosys

Tools

We monitor large and complex projects

through a combination of indigenous tools.

Knowledge Management

Our Knowledge Management Services helpyou assess your needs, evaluate technologies

and recommend solutions.
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Infosys

Program Management

Our project management processes address

key aspects across the project life cycle.

Risk Mitigation

The risk management framework of Infosyscovers risk identification, prioritization and

mitigation.
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CLOUD COMPUTING

Cloud computing is a general term for anything thatinvolves delivering hosted services over the Internet.

These services are broadly divided into threecategories: I

Infrastructure-as-a-Service (IaaS),

Platform-as-a-Service (PaaS)

Software-as-a-Service (SaaS).


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CLOUD COMPUTING

The name cloud computing was inspired by

the cloud symbol that's often used to

represent the Internet in flowcharts and

diagrams.
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CLOUD COMPUTING

A cloud service has three distinct characteristics thatdifferentiate it from traditional hosting.

It is sold on demand, typically by the minute or the hour;

it is elastic -- a user can have as much or as little of a serviceas they want at any given time;

The service is fully managed by the provider (the consumerneeds nothing but a personal computer and Internetaccess).

Significant innovations in virtualization and distributed

computing, as well as improved access to high-speedInternet and a weak economy, have accelerated interest incloud computing.


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CLOUD COMPUTING

A cloud can be private or public.

A public cloud sells services to anyone on theInternet. (Currently, Amazon Web Services is

the largest public cloud provider.) A private cloud is a proprietary network or a

data center that supplies hosted services to alimited number of people.
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CLOUD COMPUTING

When a service provider uses public cloud

resources to create their private cloud, the

result is called a virtual private cloud. Private

or public, the goal of cloud computing is toprovide easy, scalable access to computing

resources and IT services.


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CLOUD COMPUTING

Infrastructure-as-a-Service like Amazon Web

Services provides virtual server instances with

unique IP addresses and blocks of storage on

demand.


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CLOUD COMPUTING

Customers use the provider's application

program interface (API) to start, stop, access

and configure their virtual servers and

storage.
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CLOUD COMPUTING

In the enterprise, cloud computing allows a

company to pay for only as much capacity as is

needed, and bring more online as soon as

required.


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CLOUD COMPUTING

Because this pay-for-what-you-use model

resembles the way electricity, fuel and water

are consumed, it's sometimes referred to as

utility computing.


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CLOUD COMPUTING

Platform-as-a-service in the cloud is defined as

a set of software and product development

tools hosted on the provider's infrastructure.

Developers create applications on the

provider's platform over the Internet.

PaaS providers may use APIs, website portals

or gateway software installed on thecustomer's computer.
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CLOUD COMPUTING

In the software-as-a-service cloud model, the

vendor supplies the hardware infrastructure,

the software product and interacts with the

user through a front-end portal.


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CLOUD COMPUTING

SaaS is a very broad market. Services can be

anything from Web-based email to inventory

control and database processing. Because the

service provider hosts both the applicationand the data, the end user is free to use the

service from anywhere.

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