1. Group 1:
Outsourcing: From cost cutting
to innovation
Baleegh Khan
Lenka Stoklaskova
Ratiel Gapa
Sara Chahine

2. Introduction
•Outsourcing
 cost cutting, cost restructuring, transfer the risks of
a defined process to a third party
•Smartsourcing
 innovation, balance risk and opportunities, focus on
its core activities
•Challenges and future trends
 flexibility, overall control, cultural diversity

3. What is Outsourcing?
• A practice used by different companies to reduce costs by
transferring portions of work to outside suppliers rather
than completing it internally.
• The contracting or subcontracting of noncore activities in
which a company holds competitive advantage.

4. Reasons for Outsourcing
Source: http://www.arcusglobal.com

5. Outsourced Business Segments
• Information Technology
• Human Resources
• Facilities and real estate management
• Accounting

6. Types of Outsourcing
• 1- Business Process Outsourcing (BPO):
Contracting of the operations of a specific
business process to a third party. It is typically
categorized into back office outsourcing and front
office outsourcing.

7. Types of Outsourcing
• 2- Knowledge process outsourcing (KPO):
The allocation of high-level tasks to an outside
organization.

8. Advantages of Outsourcing
• Cost Reductions
• Access to a team of professionals
• Focus on core activities
• Develop Internal Staff
• Better Systems
• Distribution of Risk

9. Disadvantages of Outsourcing
• Loss of Managerial Control
• Threat to security and confidentiality
• Delays

10. What is Smartsourcing?
•
Smartsourcing, simply put means outsourcing
intelligently.
•
Outsourcing is only one part
•
Bridging the gap between high performance core
competencies and poor performance non-core activities.
•
Let you see the spectrum of your organization
capabilities
•
determine how to best achieve the highest level of
performance, cost and innovation
•
Intimate relationship between the organization and its
service partner

11. Difference between Outsourcing and
Smartsourcing
OUTSOURCING
SMARTSOURCING
CUT COSTS
CUT COSTS + INCREASE INNOVATION
STREAMLINE OPERATIONS
STREAMLINE THE VALUE CHAIN
PARTNER ON WHAT YOU KNOW
PARTNER TO DEFINE WHAT YOU DON’T
KNOW
TACTICAL IMPROVEMENT
STRATEGIC EXCELLENCE
DISCONTINUOUS
CONTINUOUS
ARMS LENGTH PARTNERSHIP
TRUST-BASED PARTNERSHIP

12. How can Smartsourcing create
innovation?
• Key Principles:
• Flexibility (short term relationship, change of scope)
• Preparation (measurement framework with real data)
• Choice (multisourcing, reduce provider lock-in, greater options)
• Planning (picture of end state, change management)
• Control (retain the business value functions)
• Partnership (shared ownership, common goals)

13. Smartsourcing Based on
• Products and services
• Business model
• Processes
• Supply chain
• Customer care

14. Key Areas

15. Issues in outsourcing
• A multi-objective solution
• Flexibility – a trending theme
• Due diligence and effective vendor engagement
• Higher costs/slower product development
• Environmental context

16. Conclusion
• Careful analysis
• Effective outsourcing
• Don’t ‘Outsource your soul’

17. References
• Brad Vaughan, Ken Buchanan, & Richard Evans Manageability Services
Practice - White Paper September 2005
• T. M. Koulopoulos: Smartsourcing: Driving innovation and growth through
outsourcing, Platinum Press, Avon, 2006
• Schwenker, S. Boetzel: Making growth work - How companies can expand
and become more efficient, Sprin- ger Berlin Heidelberg, Hamburg, 2007
• http://www.entrepreneur.com
• http://www.investopedia.com
• http://www.businessdictionary.com
• http://www.sitel.com
• http://www.outsourcing.com
• http://www.venturenavigator.co.uk

18. Questions?