1 / 38

Business Plug-In B13

Business Plug-In B13. Strategic Outsourcing. LEARNING OUTCOMES. Explain the business benefits and challenges of outsourcing Identify the three primary outsourcing options Summarize a list of leading offshore outsourcing countries. LEARNING OUTCOMES.

koen
Download Presentation

Business Plug-In B13

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Business Plug-In B13 Strategic Outsourcing

  2. LEARNING OUTCOMES • Explain the business benefits and challenges of outsourcing • Identify the three primary outsourcing options • Summarize a list of leading offshore outsourcing countries

  3. LEARNING OUTCOMES • Summarize a list of up-and-coming offshore outsourcing countries • Summarize a list of rookie offshore outsourcing countries • Describe the future trend of multisourcing and how it can support a business need for outsourcing

  4. INTRODUCTION • Outsourcing – an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house • Typically, the outsourced process or function is a noncore business activity

  5. The Outsourcing Phenomenon • According to research firm IDC, the worldwide IT outsourcing market will reach $230 billion by 2009 • According to PricewaterhouseCoopers “Businesses that outsource are growing faster, larger, and more profitable than those that do not”

  6. The Outsourcing Phenomenon • Most organizations outsource their noncore business functions, such as payroll and IT

  7. The Outsourcing Phenomenon • Outsourcing growth drivers • Globalization • The Internet • Growing economy and low unemployment rate • Technology • Deregulation

  8. OUTSOURCING BENEFITS • Outsourcing benefits include: • Increased quality and efficiency • Reduced operating expenses • Outsourcing non-core processes allows focus on core competencies • Reduced exposure to risk • Service providers economies of scale, expertise, and best practices • Access to advanced technologies • Increased flexibility • Avoid costly outlay of capital funds • Reduced headcount and associated overhead expense • Reduced frustrations and expense related to hiring/retaining employees • Reduced time to market for products or services

  9. OUTSOURCING OPTIONS • Onshore outsourcing –engaging another company within the same country for services • Nearshore outsourcing – contracting an outsourcing arrangement with a company in a nearby country • Offshore outsourcing –using organizations from developing countries to write code and develop systems

  10. OUTSOURCING OPTIONS • Big selling point for offshore outsourcing “inexpensive good work”

  11. OUTSOURCING OPTIONS

  12. OFFSHORE OUTSOURCING • Three categories of outsourcing countries: leaders, up-and-comers, rookies

  13. The Leaders • Canada • India • Ireland • Israel • Philippines

  14. The Leaders • Canada

  15. The Leaders • India

  16. The Leaders • Ireland

  17. The Leaders • Israel

  18. The Leaders • Philippines

  19. The Up-and-Comers • Brazil • China • Malaysia • Mexico • Russia • South Africa

  20. The Up-and-Comers • Brazil

  21. The Up-and-Comers • China

  22. The Up-and-Comers • Malaysia

  23. The Up-and-Comers • Mexico

  24. The Up-and-Comers • Russia

  25. The Up-and-Comers • South Africa

  26. The Rookies • Argentina • Chile • Costa Rica • New Zealand • Thailand • Ukraine

  27. The Rookies • Argentina

  28. The Rookies • Chile

  29. The Rookies • Costa Rica

  30. The Rookies • New Zealand

  31. The Rookies • Thailand

  32. The Rookies • Ukraine

  33. THE CHALLENGES OF OUTSOURCING • Outsourcing challenges include • Contract length • Difficulties in getting out of a contract • Problems in foreseeing future needs • Problems in reforming an internal IT department after the contract is finished • Competitive edge • Confidentiality • Scope definition

  34. Future Trends • Outsourcing is becoming less of a cost-saving strategy and more an overall context for business • Outsourcing is approaching commodity status • Companies should look for value-based pricing rather than the lowest possible price • Multisourcing – a combination of professional services, mission-critical support, remote management, and hosting services that are offered to customers

  35. Closing Case OneMobile Travel Guide • Mobil Travel Guide decided to outsource to IBM all of its Web applications and database servers • Mobile Travel Guide avoided up-front capital investment without sacrificing scalability, reliability, or flexibility

  36. Closing Case One Questions • What are the main reasons Mobil Travel Guide used an outsourcing option? • What other areas would you recommend Mobile Travel Guide outsource? • What advantages and disadvantages would offshore outsourcing or nearshore outsourcing have for Mobile Travel Guide? • Make a list of the countries where Mobil could outsource its Travel Guide

  37. Closing Case Two Outsourcing Brew • Coors Brewing Company needed to improve access to information, consolidate systems, and reduce costs • Coors outsourced its day-to-day management of its technical operations, conversion of legacy applications, and system to EDS

  38. Closing Case Two Questions • Describe an alternative approach that Coors could have used instead of outsourcing to EDS • What would be the advantages of offshore outsourcing Coors’ IT department? • What are some other reasons Coors outsourced its information technology functions that were not mentioned in the case? • Describe some of the factors causing Coors to be “forced” to outsource its information technology functions

More Related