3. Free Trade
Make or Buy
Better diversification
Flexible
Assign task to external enterprises
Globalisation
Outsource Work
Foreign Countries
OUTSOURCING?
Not sure if good or bad
destroys jobs
What does that means?
Problems
One mans blessing is another mans curse
India & China
Lower operational and labour costs
Focus on core business
Saving cost
4. Definition’s
Outsourcing is any task, operation, job, process
that could be performed by employees within an
organization , but is instead contracted to a third
party for a significant period of time generally
non-core aspects of the business that are
outsourced
Outsourcing refers to contracting work out to an
external organization
Outsourcing includes both foreign and domestic
contracting
Sometimes includes offshoring or relocating a
business function to another country
5. History & Evolution
1989- Outsourcing done via internet in mid nineties
1990- The Modern Wave: BPO
(Business Process Outsourcing )
2000-Accepted practice in Europe
Any task that was not vital for the companies,
(especially tedious) work like:
- Data entry jobs
- Accounting
- Support services
- Mail distribution within the company
7. Market size, Facts & Figures
IT Services to grow 3.5% in 2013,4.7 % CAGR to 2017
BPO Services to grow 5.1% in 2013,6.0 % CAGR to 2017
Global BPO & IT Services market is US $ 952 Billion
IT Services – US $ 648 Billion
BPO
– US $ 304 Billion
A job outsourced is a job lost
India maintains a strong-lead in terms of language skills
and vendor maturity, together with an enviable track
record and strong albeit slow legal system
Availability of a fairly large and qualified pool of workers
is imperative to the success of these Indian cities over
the rest of the world
8. Just India
Meeting growing demands for inexpensive product
India holds leadership position in offshore outsourcing
market today
10. Cost Savings
Lower operational and labor costs are among the
primary reasons why companies choose to outsource.
When properly executed it has a defining impact on a
company’s revenue recognition and can deliver
significant savings.
14. World Class Capabilities
Outsourcing and
offshoring also enable
companies to tap in to
and leverage a global
knowledge base, having
access to world class
capabilities.
Outsourcing also
enables companies to
realize the benefits of
re-engineering.
15. Advantages vs. Disadvantages
Threat to
security &
confidentiality
Specialization
Cost
Saving
Focus
Loss of
managerial
control
Quality
Problems
16. Advantages vs. Disadvantages
Lack of
customer focus
Threat to
security &
confidentiality
Specialization
Cost
Saving
Focus
Loss of
managerial
control
Quality
Problems
17. Advantages vs. Disadvantages
Lack of
customer focus
Specialization
Cost
Saving
More
Successful
Focus
Threat to
security &
confidentiality
Loss of
managerial
control
Quality
Problems
18. Advantages vs. Disadvantages
Lack of
customer focus
Increase speed
to market
Specialization
Cost
Saving
Expand Service
More
Successful
Focus
Threat to
security &
confidentiality
Loss of
managerial
control
Quality
Problems
20. About Apple Inc.
American MNC
World's second-largest information technology company
Employee - 72,000 ( As on Sep-12)
Revenue: US $ 171 billion
Net Revenue per employee : 2.375 millions
Apple Inc. is sitting at US $416.6 billion
Apple Inc. 200,000 assembly line workers making iPhones in
China
In July 2011, Apple Inc. had more cash in the bank than the US
government.
iPhone assembly process is 141 stage
23. About Nike
American MNC
Clothing, footwear, sportswear, and equipment supplier
It has 48,000 employees worldwide
Manufacturing: They utilize an outsourcing strategy, using
only subcontractors throughout the globe.
Over 500,000 people today directly engaged in the production
of their products
Factories are 100% owned by subcontractors, with the
majority of their output consisting solely of Nike products
With 38% in global sports footwear market, it is the most
successful sports footwear manufacturer in the world!
Revenue: US$24.128 billion
Average number of Nike shoes sold each year 150 million
24. Future of Outsourcing
Outsourcing will continue to grow
Services will become more standardized, creating new
norms
New service providers will appear in Eastern Europe and
China
Asian players will move on-shore and compete head-on
with traditional local players
Local regulations will continue to be opened up to
support cross-border services
Politics will start to address increasing social issues and
concerns