153687099-Outsourcing for business 1.ppt

153687099-Outsourcing for business 1.ppt

2. Outsourcing contracting out of a business
function commonly one previously performed
in-house to an external provider. In this
sense, two organizations may enter into a
contractual agreement involving an exchange
of services and payments. Of recent concern
is the ability of businesses to outsource to
suppliers outside the nation, sometimes
referred to as off shoring or offshore
outsourcing.

3. Outsourcing is any task, operation, job or process
that could be performed by employees within an
organization, but is instead contracted to a third
party for a significant period of time. In addition, the
functions that are performed by the third party can
be performed on-site or off-site.
The practice of having certain job functions done
outside a company instead of having an in-house
department or employee handle them; functions can
be outsourced to either a company or an individual

4. Outsourcing is an arrangement in which one
company provides services for another
company that could also be or usually have
been provided in-house. Outsourcing is a trend
that is becoming more common in information
technology and other industries for services
that have usually been regarded as intrinsic to
managing a business.

5. Business process outsourcing (BPO) – It is a subset of outsourcing
that involves the contracting of the operations and responsibilities
of specific business functions (or processes) to a third-party service
provider. Originally, this was associated with manufacturing firms,
such as Coca Cola that outsourced large segments of its supply chain.
In the contemporary context, it is primarily used to refer to the
outsourcing of business processing services to an outside firm,
replacing in-house services with labor from an outside firm.
BPO is typically categorized into back office outsourcing - which
includes internal business functions such as human resources or
finance and accounting, and front office outsourcing - which includes
customer-related services such as contact centre services.

6. Legal Process Outsourcing (LPO) – It refers to the practice of a law
firm or corporation obtaining legal support services from an
outside law firm or legal support services company. LPO services is
at a nascent stage with relatively consistent market growth since
emergence of LPO in 1997. They traditionally offer services in the
areas of document review, legal research and writing, drafting of
pleadings and briefs, and patent services outsourcing.
The Recruitment Process Outsourcing -- RPO is defined as: when
a provider acts as a company's internal recruitment function for a
portion or all of its jobs. RPO providers manage the entire
recruiting/hiring process from job profiling through the
onboarding of the new hire, including staff, technology, method
and reporting. A properly managed RPO will improve a company's
time to hire, increase the quality of the candidate pool, provide
verifiable metrics, reduce cost and improve governmental
compliance.

7. Knowledge process outsourcing (KPO) -- It is a form of outsourcing, in
which knowledge-related and information-related work is carried out by
workers in a different company or by a subsidiary of the same
organization. KPO firms, in addition to providing expertise in the
processes themselves, often make many low level business decisions.
Knowledge process outsourcing (KPO) is the term used to describe
outsourced support that requires deep domain knowledge and the
exercise of judgment and interpretation. It differs from traditional
BPO outsourcing, which tends to focus on rules-based processing. KPO
typically requires people with higher education, specific skills, and
specialized business experience.

8. Engineering process outsourcing (EPO) -- EPO
industry plays a crucial role in efficiently supporting
dynamic architecture, engineering and construction
industries worldwide. EPO is different from
manufacturing and information technology for the
simple reason that each project is unique. AEC
industry has huge variations and immense
complexity its history is as old as human race and its
growth has been compounding with technological
growth.

9. Third Party Logistics--Third party logistics providers specialize in
integrated operation, warehousing and transportation services that can
be scaled and customized to customers' needs based on market
conditions and the demands and delivery service requirements for their
products and materials. A third-party logistics provider (abbreviated
3PL, or sometimes TPL) is a firm that provides a one stop shop service to
its customers of outsourced (or "third party") logistics services for
part, or all of their supply chain management functions.

11. Cost savings — It involves lowering of the overall cost of
the service to the business, which is done by reducing the
scope, defining quality levels, re-pricing, re-negotiation,
and cost re-structuring. Access to lower cost economies
through off shoring generated by the wage gap between
industrialized and developing nations.
Focus on Core Business — Resources (for example
investment, people, infrastructure) are focused on
developing the core business. For example often
organizations outsource their IT support to specialized IT
services companies.
Liability — Organizations choose to transfer liabilities
inherent to specific business processes or services that
are outside of their core competencies.

12. Improve quality — Achieve a steep change in quality
through contracting out the service with a new
service level agreement.
Knowledge — Access to intellectual property and
wider experience and knowledge.
Contract — Services will be provided to a legally
binding contract with financial penalties and legal
redress. This is not the case with internal services.
Operational expertise — Access to operational best
practice that would be too difficult or time
consuming to develop in-house.

13. Access to talent — Access to a larger talent pool
and a sustainable source of skills, in particular in
science and engineering.
Capacity management — An improved method
of capacity management of services and
technology where the risk in providing the excess
capacity is borne by the supplier.
Enhance capacity for innovation — Companies
increasingly use external knowledge service
providers to supplement limited in-house
capacity for product innovation.

14. Reduce time to market — The acceleration of the
development or production of a product through the
additional capability brought by the supplier.
Risk management — An approach to risk
management for some types of risks is to partner
with an outsourcer who is better able to provide the
mitigation.
Scalability — The outsourced company will usually
be prepared to manage a temporary or permanent
increase or decrease in production.
Creating leisure time — Individuals may wish to
outsource their work in order to optimize their work-
leisure balance.

16. Loss of control –Loss of control is rated as one of the major
challenges to outsourcing. Organizations going for outsourcing,
are left with very little or no control over their partner. In
addition to that, organizations often are not able to keep up
with the consistency and quality across the channel.
Know how – Randomly applied know-how, unplanned
customization work, lack of standards, and scarcity of capable
resources can twirl programs into a failure.
Coverage – Measuring the results and finding the business
focused information about the the consultant are difficult or
impossible to get. These challenges prevent the organizations
to obtain the true insight of consultancies.

17. Dispersed Locations – Many organizations engage consultancies in
different geographical regions that adds complications to the
delivery and scheduling of processes. Most of the times a process
has to be localized for different languages and cultures which
requires specific resources.
Budget Inadequacy –Budget is one of the major constraints to
selecting the right consultancy for outsourcing a process.
Selection of appropriate offshore location—
1.Political and economic reliability of the country
2.Language and talent set of local population
3.The condition of the country's existing telecommunications
infrastructure.

18. Selection of ideal outsourcing partner—
Price
Expertise in a particular industry
Integration capabilities
Training and qualifications
Overall customer service strategy
Company information privacy
Knowledge in latest technology

19. United States
Outsourcing became a popular political issue in the United
States during the 2004 presidential election. The political
debate centered on outsourcing's consequences for the
domestic U.S. workforce.
Criticism of outsourcing in US revolves around the costs
associated with transferring control of the labor process to an
external entity in another country. A poll conducted in August
2004 found that 71% of American voters believed that
“outsourcing jobs overseas” hurt the economy while another
62% believed that the U.S. government should impose some
legislative action against companies that transfer domestic jobs
overseas, possibly in the form of increased taxes on companies
that outsource.
 

20. European Union
They have a directive under which, rights acquired
by employees with the former employer are to be
safeguarded when they, together with the
undertaking in which they are employed, are
transferred to another employer, i.e. the contractor.
In principle, employees of an enterprise outsourcing
part of its activities in which they are employed may
benefit from the protection offered by the directive.