OUTSOURCING IN VARIOUS FUNCTIONS AND INDUSTRIES

OUTSOURCING IN FUNCTIONS AND

INDUSTRIES…

WHAT IS OUTSOURCING??

Outsourcing is the process by which an organization contracts with another individual or company to get some of its work done.

Generally it is non-core aspects of the business that are outsourced.

Main reason for outsourcing is to cut costs while focusing on core business activities.

Quality management and controlling might be a big risk

Outsourcing Industry in India

India is a market leader in global outsourcing.

Six of the world's top outsourcing destinations are located in India.

As of 2007-08, Indian outsourcing industry is estimated to be worth nearly $52 billion.

Banking and financial services account for about 40 percent of India's outsourcing business.

INDIA A FAVOURED DESTINATION

Availability of qualified manpower Political stability Infrastructure Communication skills Lower wages Proven delivery capabilities

TYPES OF OUTSOURCING

Business Process

Outsourcing

Knowledge Process

Outsourcing

Information Technology Outsourcing

BUSINESS PROCESS OUTSOURCING

Contracting of the operations and responsibilities of specific business functions to a third-party service provider.

Categorized into back office outsourcing and front office outsourcing

BPO that is contracted outside a company's country is called offshore outsourcing and that to a company's neighbouring (or nearby) country is called nearshore outsourcing.

FUNCTIONS UNDER BPO Professional - accounting, purchasing,

information technology support and other specialized services.

Manufacturing - optimizing their bottom line and positively impacting their top line.

Process-specific - specific to a unique process or internal procedure

Operational - Machine maintenance, equipment repair cleaning

Functions Examples

PROFESSIONAL-BANKING

STANDARD CHARTERED has outsourced its Money

Laundering Control to India.

MANUFACTURINGFORD outsources its

component manufacturing to India to run its global

operations.

PROCESSMICROSOFT in India has

outsourced its HR functions to Gurgaon solely.

KNOWLEDGE PROCESS OUTSOURCING KPO or Knowledge Process Outsourcing

calls for work that needs higher levels of involvement from the worker.

The worker has to employ advanced

levels of research, analytical and technical skills.

KPO industry is less older and mature than the BPO sector.

FUNCTIONS UNDER KPO

SEGMENT EXAMPLES

Legal services Morgan Stanley, Dupont

Market research and analytics

Bharti Airtel hired Ogilvy

Pharma and R&D GlaxoSmithKline hired TCS

Health care services

Fortis and Sri Ganga Ram Hospital- Surrogacy

Education and training

Online Math for overseas

INFORMATION TECHNOLOGY OUTSOURCING

An organization uses IT outsourcing for functions ranging from infrastructure to software development, maintenance and support.

A company may outsource all of its data storage needs because it does not want to buy and maintain its own data storage devices. Most large organizations only outsource a portion of any given IT function.

"By 2009 the Information Technology and Enterprise Solutions (ITES) market in India alone is likely to reach $142 billion. This estimate contrasts with the current price tag of $532 billion to provide these services in the United States."

–McKinsey Study

DELL – A study in Call Center

Quick Facts Currently employs 8,000 Indians.

Services outsourced : Customer service Software Development

Added a third, 180,000-square-foot call center just this March, with about 300 new employees to start

Plans to add 2,000 people within the next year to bolster its software development and back-office services.

Expanded call center payrolls.

INDIANIZATION

Innovation

Quality of Work

Cost Reduction

A WAVE OF COMPLAINTS

"I just want to scream

when I see Dell's TV

commercials," Anderson

fumes.

Texas Better Business Bureau

logged 3,726 complaints

against Dell from consumers

throughout the U.S.

"I feel sorry for Dell technicians if they don't have that information. They're on the front lines."

Consideration to deindianize!?? Language and cultural rifts between

disgruntled U.S. customers .

Dell employees fielding calls seemed unwilling to depart from a script.

The biggest challenge for Dell in India was working on the accent.

BUT, WHAT MICHAEL DELL HAS TO SAY

ABOUT IT ?

“India represents a great market opportunity for us….business is expanding at a very rapid pace there.”

- Michael Dell

INDIA-STILL DELL’S FAVOURITE. Manufacturing not possible in India

because for that a large market, good supply base and export-import environment is necessary.

So in order to take the benefit of *Small Indian Callers* , it wants to direct its processes to India.

Thus, investment in the manufacturing base of US leads to a reduction in the man minutes from 28 to 5 now.

"The survey of 25 large organizations with a combined $50 billion in outsourcing contracts found that 70% have had negative experiences with outsourcing projects and are now taking a more cautious approach. One in four companies has brought outsourced functions back in-house and nearly half have failed to see the cost savings they anticipated as a result of outsourcing.“

– Deloitte Consulting

DELOITTE’S view of DELL’S response…..

Bibliography http://www.sourcingmag.com/

content/what_is_outsourcing.asp http://www.articlesbase.com/business-

opportunities-articles/types-of-outsourcing-services-96100.html

http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2249#T2

http://www.msnbc.msn.com/id/4853511/ns/business-forbes_com/t/dell-moves-outsourced-jobs-back-us-shores/

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