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
Knowledge Process Outsourcing Business 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
PROFESSIONALBANKING

Examples
STANDARD CHARTERED has outsourced its Money Laundering Control to India.
FORD outsources its component manufacturing to India to run its global operations.

MANUFACTURING

PROCESS

MICROSOFT 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 Market research and analytics Pharma and R&D Health care services

Morgan Stanley, Dupont Bharti Airtel hired Ogilvy GlaxoSmithKline hired TCS

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.

Cost Reduction Quality of Work

Innovation

INDIANIZATION

A WAVE OF COMPLAINTS
"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 DELLS 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.

DELOITTES view of DELLS response..

"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

Bibliography
http://www.sourcingmag.com/content/what_

is_outsourcing.asp http://www.articlesbase.com/businessopportunities-articles/types-of-outsourcingservices-96100.html http://www.rbi.org.in/scripts/bs_viewcontent. aspx?Id=2249#T2 http://www.msnbc.msn.com/id/4853511/ns/b usiness-forbes_com/t/dell-movesoutsourced-jobs-back-us-shores/

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