1. Outsourcing
Business Administration
Group 5202
Created By:
Aukse Rusteikaite
Christine Reeb
Nicole Ilnitski

2. Outline
 Definition
 History of Outsourcing
 Outsourcing Today
 Benefits of Outsourcing
 Disadvantages
 Frequently outsourced tasks
 Types of business sectors usually outsourced
 Types of business sectors rarely outsourced
 Biggest outsourcing companies
 Reasons for outsourcing
 Example
 Conclusion

3. Outsourcing is an arrangement
in which work is done by
people from outside your
company, usually by a
company which is expert in
that type of work.

4. History Of Outsourcing
0
1
2
3
4
5
6
7
8
9
10
1900-s
and
Early
1910-s 1920-s 1930-s 1940-s 1950-s 1960-s 1970-s 1980-s 1990-s 2000-s
growth rate Outsorsing Requirment
• Companies didn’t use outsourcing;
• Manufacturers take product from raw
materials stage through the production
themselves;
• Goods shipped by their own resources;
• Products delivered to company-owned
stores.
Industrial Revolution
• Companies started to outsource some services;
• Independent companies opened to serve multiple clients (architecture,
engineering, insurance etc.);
• Located in cities as the companies they were performing services for.

5. Late 20th century
Outsourcing
Manufacturing
• Production of consumer
goods;
• By the 1970s consumer
electronics products;
• Once company owners
were confident- they
could outsource
manufacturing functions
and shipping.
Outsourcing for
Payroll Services
• Computer companies
were first
• By the end of 1980s
other services started to
be outsourced
• (billing, accounting, and
word processing)

6. Outsourcing today
0 20 40 60 80 100 120 140 160 180
Outsorsing ,$ million
China Canada UK Romania Russia Ukrain USA India
 Companies such as call centres are kept busy from a steady stream of
clients looking to outsource these duties.
 When a customer calls an insurance company with a question or a
concern, he or she will likely be speaking with someone who is working
for a separate company, even though that person has been trained to
handle customer service duties.
 Many people work as independent contractors providing services to
businesses of all sizes.
 Outsourcing is a growing trend that is not likely to slow down in the
future. Some individuals may find that they are laid off from the
company they work for, and are then hired back to that some company
as a contractor!

7. Benefits of outsourcing
Concentrate
on Core
Activities
Cost and
Efficiency
Savings
Risk
Management
Staffing
Flexibility
Operational
Control
Reduced
Overhead
Quality
/State of the
Art
Transparency

8. Disadvantages of outsourcing
Quality
Problems
Loss of
Managerial
Control
Hidden Costs
Bad
Publicity

9. Frequently outsourced tasks
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
45,00%
Technical
support
Development
and
Integration
Call Center
Operations
IT
infrastructure
Data Entry
Training
Web
development
HR
Marketing
and Sales
Other
Companies are looking for ways to streamline their operations

10. Types of business sectors using
outsourcing
Public Services and
Non-Profit
Financial Services
Manufacturing
Business Serivces
Telecomunication
Delivery
Travel / Transport
Trade
Media
Insurance Health Care

11. Types of business sectors
rarely outsourced
 Any company at least once use outsourcing services
 Government
 Banks
 Small trade shop
 Start up business

12. Biggest outsourcing
companies
 Top 10 companies, along with the number of outsourced jobs:
63,700
22,400
17,450 15,000
15,000
14,250 14,000
13,000
10,426
10,800

13. Reasons for outsourcing

14. Example
 Business type: IT services Consulting
 Project: Description of processes in large company and create
auto documentation based on created process in short time
 Outsource: Script developer
 In project: Create script-report
 Reasons: Company had no sufficient number of experts for
project implementation in periods
 Minus: lost management control under outsourcer, additional
requirements have added cost

15. Conclusion
 Outsourcing is often portrayed negatively in the media.
There is no doubt some people are hurt by outsourcing.
The outsourcing theory, however, is intended to be
positive, especially in the long term, as it allows
companies and people to focus on what they do best.

16. QUESTIONS
 When was outsourcing developed?
 What kinds of disadvatages of outsourcing do you
know?
 Give 3 Reasons for outsourcing.
 Which company outsourced the highest amount of
jobs?
 Are all business sectors outsourced?