What is Outsourcing? Offshoring?
Reasons to Outsource
Popular Countries to Outsource
Outsourcing vs. Offshoring
Advantages/Disadvantages and Implications
Bans on Offshoring
Practice used by different companies to reduce costs
by transferring portions of work to outside suppliers
rather than completing it internally
Moving of routine jobs and/or tasks to people in
another firm at less costs
HR/Payroll, Accounting and Finance, Information
Having certain business functions performed by the
same company but in a different country.
China seen an emerging country-produce at a
Companies are more satisfied with the quality of
work and have better results
Business processes performed by another company in
a different country
Ex: US company having software developed by a
software company in India.
Caused by decreases in telecommunication costs.
Choosing the right company to outsource job to.
Compatible with business approach and culture
REASONS TO OUTSOURCE
Reduce or control costs
Free up internal resources
Gain access to world-class capabilities
Increase revenue potential
Increase process efficiencies
Be able to focus on core activities
Compensate for a lack of specific capabilities or
KEY SUCCESS FACTORS
The skill level of the outsourced staff
Research request review process
Information suppliers’ contracts
POPULAR COUNTRIES TO
Asia: India, China, Philippines, Thailand,
Europe: Czech Republic, Poland, Hungary,
Middle East: Egypt
The Americas: Mexico, Costa Rica, Brazil
English proficiency is good for many of these
Yearly entry-level Programmer Salary ranges
OUTSOURCING VS. OFFSHORING
British Airways moves customer relations and
passenger revenue accounting to India
Parts of Boeing airplanes are designed and
engineered in Moscow, Russia
Ernst and Young moves global research division
American Express moves a variety of services to
J.P. Morgan moves investment research to India
OUTSOURCING VS. OFFSHORING
Delta outsources reservation functions to India
T-Mobile outsources part of its content
development and portal configuration to India
Greater London Authority outsourced the
development of a road toll system to India.
Cost-Savings Approach: Getting it cheap >
Getting it right
Special attention as to what component is
Ex. Univ of Utah Prof. David Eccles
BANS ON OFFSHORING
August 2010 Congress passed a law raising fees
for work visas by $2k.
Ohio bans outsourcing
Global management consulting, technology
services and outsourcing company serving clients
in more then 120 countries
India’s outsourcing is a combination of high
quality and super low cost.
Indian companies such as Infosys Technologies
and Wipro had an effect on US domestic tech
Accenture adapted well by combining the best
aspects of the Indian offshoring approach with
the company’s primary activity-business
Spotted the Indian upsurge quickly and
Strategy is the preferred business model for the
global tech services industry.
TO OUTSOURCE/OFFSHORE OR NOT TO
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(call center, customer service, etc. ) Should Be Kept Close to Home. Pro or
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US. A ban on offshoring Ohio government IT projects feels like he thin edge of
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