OUTSOURCING/OFFSHORING LUIS HERNANDEZ GBA 671 FALL 2011 DR. WATERS AGENDA What is Outsourcing? Offshoring? Reasons to Outsource Popular Countries to Outsource Outsourcing vs. Offshoring Advantages/Disadvantages and Implications Bans on Offshoring Accenture Outsourcing 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 Technology, Benefits Offshoring Having certain business functions performed by the same company but in a different country. China seen an emerging country-produce at a cheaper rate Control Operations Companies are more satisfied with the quality of work and have better results Offshore Outsourcing 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 skills KEY SUCCESS FACTORS The skill level of the outsourced staff Research request review process Information suppliers’ contracts POPULAR COUNTRIES TO OUTSOURCE/OFFSHORE Asia: India, China, Philippines, Thailand, Vietnam Europe: Czech Republic, Poland, Hungary, Russia Middle East: Egypt The Americas: Mexico, Costa Rica, Brazil English proficiency is good for many of these countries Yearly entry-level Programmer Salary ranges about $5,000-$15,000 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 to India American Express moves a variety of services to India 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. ADVANTAGES/DISADVANTAGES AND IMPLICATIONS Cost-Savings Approach: Getting it cheap > Getting it right Overseas Training Time Factor Culture Government/Regulations Special attention as to what component is outsourced 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 ACCENTURE 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 services company Accenture adapted well by combining the best aspects of the Indian offshoring approach with the company’s primary activity-business consulting Spotted the Indian upsurge quickly and responded early Strategy is the preferred business model for the global tech services industry. TO OUTSOURCE/OFFSHORE OR NOT TO OUTSOURCE/OFFSHORE? Questions/Comments REFERENCES Valacich, Joe, and Christoph Schneider. Information Systems Today-Managing in the Digital World. 4. Upper Saddle River: Prentche Hall, 2010. 47-70. Print. Ginsburg, Carol, and Willem Noorlander. "Online." Outsourcing and Offshoring. 32.4 (2008): 38-42. Web. 29 Sep. 2011. <http://0- web.ebscohost.com.opac.library.csupomona.edu/ehost/detail?sid=544b4467- e2c2-4579-8b15- 04c4eadda35f%40sessionmgr112&vid=1&hid=126&bdata=JnNpdGU9ZWhvc3 QtbGl2ZQ%3d%3d#db=buh&AN=32918621>. Lewis, Alan. "Outsourcing Is Not The Answer-Certain Aspects of a Business (call center, customer service, etc. ) Should Be Kept Close to Home. Pro or Con?." Bloomberg BusinessWeek. 062011: n. page. Web. 29 Sep. 2011. <http://www.businessweek.com/debateroom/archives/2011/06/outsourcing_is_no t_the_answer.html>. Einhorn, Bruce, and Ketaki Gokhale. "India Outsourcers Feel Unloved in the US. A ban on offshoring Ohio government IT projects feels like he thin edge of the wedge in Bangalore." Bloomberg BusinessWeek. 112010: n. page. Web. 29 Sep. 2011. <http://www.businessweek.com/magazine/content/10_46/b4203016835355.htm> . Hamm, Steven. "How Accenture One-Upped Bangalore. It leads the pack in tech services, melding offshoring and classic consulting." Business Week. 042007: n. page. Web. 29 Sep. 2011. <http://www.businessweek.com/pdf/270499bwEprint.pdf>.
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