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					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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