Outsourcing

Case study: Outsourcing Group members: Amit Rastogi, Komal,Neha, Ashutosh

What is Outsourcing? Outsourcing is the contracting out of a company's non-core, non-revenue producing activities to It differs from contracting in that outsourcing is a strategic management tool that involves the restructuring of an organization around what it does best – its core competencies. Three common types of outsourcing are Information Technology (IT) outsourcing ,legal process outsourcing (LPO) and Business Process Outsourcing (BPO). BPO includes outsourcing related to accounting, human resources, benefits, payroll, and finance functions and activities. All these activities fall under broad category of Knowledge process outsourcing (KPO)

Business Process Outsourcing (BPO) “Business process outsourcing (BPO) is a form of outsourcing which involves the contracting of the operations and responsibilities of a specific business function to a third-party service provider “ . (5)

Resource-based strategic approach means that the firm must understand its resources and capabilities, select the strategy that exploits key strengths and develop and enhance them, while managing key weaknesses (8).

Value Chain Analysis

The value chain analysis is essential in order to identify the resources and capabilities that are involved in each stage of the value chain. At this point the firm must appraise resources and capabilities according to 2 criteria: - strength and weaknesses - importance (9).

The most important threat for a firm is to manage key weaknesses . (10)

The most decisive and successful way to Advantages of BPO: • Cost saving • Time saving • Refocus energies on strategic and core issues • Access to world-class capabilities • Risk mitigation (11).

Oppornuties for NASSCOM-McKinsey published a reportBPO in Indian 2005 on Indian BPO segment •Adopt business models, focus and approach •Areas of focus–customer care, HR, administration •Sector of focus-banking and insurance •Other areasTelecom,Manufacturing,Transportation,Retailin g,Utilities,Automotive,Pharmaceuticals

REASON FOR Enrollment GROWTH •19 million in high schools and 10 million in pre graduate degree course Pass-out •2.1 million graduates and .3 million postgraduates •Huge chunk of population opt for IT industry.17 million people available to the IT industry by 2008.

ITES-BPO Spending pattern

ITES-BPO Spending by Segment 2001-06

Comparisions with other countries on IT services

HUGE POOL OF MANPOWER •Large Human Resource India’s key strength for the growth of software is the industry large human resource. Indian software industry employs more than 450,000 programmers and the qualified labour pool grew more than 15 percent annually. •Indian Education System The Indian education system places strong emphasis on mathematics and science, resulting in a large number of science and engineering graduates. •Quality Manpower Indian programmers are known for their strong technical skills and their eagerness to accommodate clients.India also has one of the largest pools of English-speaking professionals  

GOVERNMENT POLICIES Government has taken several initiatives to promote the development of IT:  The reforms have reduced licensing requirements and made foreign

technology accessible.

 The reforms have also removed restrictions on investment and made

the process of investment easier. The government is actively promoting FDI, investments from NRIs.

 Till 1994, DOT(department of telecom) was the sole provider of basic

telecom services in India. The new National Telecom Policy has opened the field for private participants.

 The Ministry of Information and Communication Technology is

GOVERNMENT POLICIES  Tax rates have been rationalized and tax laws have been simplified.  The Ministry of Information Technology has set up a National Venture

Fund for the Software and IT Industry with a corpus of Rs. 100 crore in association with the Small Industries Development Bank of India (SIDBI) and Industrial Development Bank of India (IDBI).

Emphasis on quality qfirms adhere to (PCMM). P-CMM) is a maturity framework that focuses on continuously improving the management and development of the human assets of an organization. 316 firms adopting this certification. Indian firms manage the software firms of over 255 Fortune 500 companies.

Future projections for India IT & IT enabled services exports will account for more than 30% of foreign exchange inflows Increased employment opportunities. (0.5to2mn). In ITES exports ( increased job opportunities in customer care ,H.R & administration)

IT Enabled Services These services provide a wide range of career

options that include opportunities in call Centres, medical transcription, medical billing and coding etc. Demand of IT Enabled Services: Driven by the increasing trends of companies becoming more and more direct and personalized in their sales and service approach to their customers.

Advantages of ITES Location attractiveness :

Significant investment in infrastructure with the establishment of Technology Parks like Hitec city Hyderabad, Tata-Singapore Consortium Bangalore, Tidel Park Chennai, etc. People attractiveness Spread of BPO in India

BPO Services in India are spread around cities where basic IT and Communication (ITC) infrastructure exists and is being developed. Advantage North East career opportunities such as Attractive financial/ tax and infrastructural incentives, Significant number of English speaking people,Education infrastructure, Workforce quality, IT / telecom infrastructure and Low attrition rates.

Challenges for ITES industry Ø Increase access to customers. Ø Developing credibility. Ø Build a vibrant domestic market by encouraging FIs, banks , MFs , telecom Co. to outsource assess & billing processes. Ø Talent pool creation, through training & certifications. Ø Use new technologies to reduce costs. Ø Enhance service quality .

Thank You!

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