Outsourcing
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The document provides an overview of outsourcing, including definitions, reasons for outsourcing, key areas that are commonly outsourced, advantages and disadvantages, types of outsourcing models, and considerations for when and what functions to outsource. It defines outsourcing as procuring services from a third party to perform activities traditionally handled internally. Common reasons for outsourcing include reducing costs, focusing on core competencies, and improving quality. Areas frequently outsourced include IT, call centers, finance/accounting, and manufacturing. The document also discusses trends toward increasing outsourcing over time.
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Outsourcing
- 1. OUTSOURCING By Sina Ghasemian Zadeh
- 2. AGENDA INTRODUCTION TO OUTSOURCING WHAT IS OUTSOURCING ? WHY DO COMPANIES OUTSOURCING? KEY AREAS OF OUTSOURCING ? OUTSOURCING PRO AND CONS ? TYPES OF OUTSOURCING WHAT CAN BE OUTSOURCED WHEN TO OUTSOURCE CONCLUSION 2
- 3. INTRODUCTION OUTSOURCERCOMPANY Services Organization Level Agreement Service Level Agreement Outsourcing denotes the continuous procurement of services from a third party,making use of highly integrated processes, organization models and information systems. 3
- 4. WHAT IS OUTSOURCING? OUTSOURCING - THE STRATEGIC USE OF OUTSIDE RESOURCES TO PERFORM ACTIVITIES TRADITIONALLY HANDLED BY INTERNAL STAFF AND RESOURCES DAVE GRIFFITHS WHY OUTSOURCE? PROVIDE SERVICES THAT ARE SCALABLE, SECURE, AND EFFICIENT, WHILE IMPROVING OVERALL SERVICE AND REDUCING COSTS 4
- 5. WHY DO COMPANIES OUTSOURCE? 36% 36% 13% 10% 4% 1% TOP REASON FOR OUTSOURCING Reduce Cost Focus on core Improve Quality Increase Speed to market Conserve Capital Foster innovation 5
- 6. KEY AREAS OF OUTSOURCING ? INFORMATION TECHNOLOGY/IT SOLUTIONS CALL CENTERS FINANCE & ACCOUNTING OUTSOURCING PROCUREMENT OUTSOURCING TEXTILES MANUFACTURING HUMAN RESOURCE MANAGEMENT 6
- 8. ADVANTAGES OF OUTSOURCING Cost Effective Skilled Expertise Distribution of risk Access to world-class solutions Time zone difference Focus on core competencies Improving customer service Better people management Increased productivity and Efficiency 8
- 9. DISADVANTAGES OF OUTSOURCING Loss Of Managerial Control Hidden Costs Bad Publicity and Ill-Will Linguistic barriers Threat to Security and Confidentiality Quality Problems Lack of customer focus lose talent inside within your company Tied to the Financial Well- Being of Another Company 9
- 10. Problems with outsourcing LOSS OF CONTROL INCREASED CASH OUTFLOW CONFIDENTIALITY AND SECURITY SELECTION OF SUPPLIER TOO DEPENDENT ON SERVICE PROVIDER LOSS OF STAFF OR MORAL PROBLEMS TIME CONSUMING PROVIDER MAY NOT UNDERSTAND BUSINESS ENVIRONMENT PROVIDER SLOW TO REACT TO CHANGES IN STRATEGY 10
- 11. 11 Business processes Application Development and Maintenance IT-infrastructure ITO: IT Infrastructure Outsourcing ITS: IT Services, Managed Hosting Administrative processes BPO AMO SDO BPO: Business Process Outsourcing ASP: Application Service Provider DBRO: Design, Build, Run & Operate ADM: Application Develop. & Maintenance APO: Administrative Process Outsourcing OUTSOURCING MODELS
- 12. RECRUITMENT PROCESS OUTSOURCING (RPO) RECRUITMENT PROCESS OUTSOURCING IS A FORM OF BUSINESS PROCESS OUTSOURCING (BPO) WHERE AN EMPLOYER OUTSOURCES OR TRANSFERS ALL OR PART OF ITS RECRUITMENT ACTIVITIES TO AN EXTERNAL SERVICE PROVIDER. 12
- 13. ENGINEERING PROCESS OUTSOURCING( EPO) EPO OFFERS GLOBAL CONSULTING AND OUTSOURCING SERVICES PROVIDING END-TO-END SERVICES IN THE AREAS OF ENGINEERING AND TECHNICAL PROCESS OUTSOURCING. 13
- 14. BUSINESS PROCESS OUTSOURCING (BPO) BPO 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. 14
- 15. KNOWLEDGE PROCESS OUTSOURCING (KPO) KPO DESCRIBES THE OUTSOURCING OF CORE BUSINESS ACTIVITIES, WHICH OFTEN ARE COMPETITIVELY IMPORTANT OR FORM AN INTEGRAL PART OF A COMPANY'S VALUE CHAIN. THEREFORE KPO REQUIRES ADVANCED ANALYTICAL AND TECHNICAL SKILLS AS WELL AS A HIGH DEGREE OF PROPRIETARY DOMAIN EXPERTISE 15
- 16. LEGAL PROCESS OUTSOURCING (LPO) LPO REFERS TO THE PRACTICE OF A LAW FIRM OR CORPORATION OBTAINING LEGAL SUPPORT SERVICES FROM AN OUTSIDE LAW FIRM OR LEGAL SUPPORT SERVICES COMPANY. THIS PROCESS HAS BEEN MARKED BY THE PRACTICE OF OUTSOURCING ANY ACTIVITY EXCEPT THOSE WHERE PERSONAL PRESENCE OR CONTACT IS REQUIRED. 16
- 17. AMO - APPLICATION MANAGEMENT OUTSOURCING 17 Break/Fix Support Enhancements Upgrades New Development Single Application Group of Application Entire Application Portfolio Services Application Application Outsourcing Solution based on a flexible Arrangement
- 18. SDO SERVICE DELIVERY OUTSOURCING 18 Services DataCenters DesktopMgmt. & Mobility TechnicalSupport NetworkServices Security SupplierMgmt. Client Operations Management Messaging & Collaboration Technical Support Desktop Management & Mobility Network Management Hosting Sales Support and Mobilization Security Operations Delivery capabilities Security End-to-end security services including firewall management, intrusion detection, identity management and security policy Data Centers Remote and on-site managed server hosting Data centers Technical Support - Help desk, desk-side and self- service support - Global hubs Network Services Managing data and voice networks Desktop Management and Mobility PC, laptop, hand-held, distributed Supplier Management
- 19. RECENT & FUTURE TRENDS IN OUTSOURCING 19 93% 7% 2010 75% 25% 2020 inhouse outsourcing
- 20. WHEN CAN BE OUTSOURCED? 20 Grey Area Not Outsourced In House if Possible Outsource Competitive Strategic Non-Strategic Non-Competitive PricewaterhouseCoopers Model
- 21. WHAT CAN BE OUTSOURCED SYSTEM INTEGRATION DATA NETWORK MAINFRAME DATA CENTER VOICE NETWORK, INTERNET/INTRANET MAINTENANCE/REPAIR APPLICATIONS DEVELOPMENT E-COMMERCE END-USER SUPPORT SYSTEM 21
- 22. OUTCOME SOME OF THE KEY RESULT AREAS IDENTIFIED WERE: ANNUAL REVENUE SAVINGS CLOSE TO 60 PERCENT BETTER PROCESS STANDARDIZATION USING A DETAILED MANUAL ON PROCESS MAPS / FLOW CHARTS LEVERAGING CORE COMPETENCIES AND REDUCING ONSHORE LOAD BETTER EFFICIENCY AT LOWER DELIVERY COST FOLLOWING A CONTINUOUS PROCESS IMPROVEMENT MODEL IMPROVED TAT THROUGH IMPLEMENTING A TAT MONITORING SYSTEM AND ACCESS PROVISIONING MORE FLEXIBILITY TO CHANGING TECHNOLOGY ENVIRONMENT SPECIALIZED AND CONTINUOUS TRAINING PROGRAMS TO HELP STAFF STAY CURRENT VALUE-ADD IN BUSINESS MODEL THROUGH CUSTOMER RELATIONSHIP BUILDING 22
- 23. CONCLUSION INVEST IN PLANNING FOCUS ON TOTAL COST OF OWNERSHIP MANAGE COSTS HOLISTICALLY USE REAL TIME EXPERTISE TO PROVIDE OFFSHORE KNOWLEDGE AND PROCESS MANAGEMENT 23
- 24. 24 QUESTION?
- 25. 25 THANK YOU