Topic – Fears of Outsourcing Contents 1. 2. 3. 4. 5. 6. Introduction Issues regarding Outsourcing Statistics Advantages Media Highlights Conclusion
1.Introduction This is one of the most interesting and talked about subject “The Fears of Outsourcing”. Does something like outsourcing fears really exist or is it the lack vision of some individuals that created this furor. What are the main benefits of Outsourcing and how does it affect the Company and the economy of a Country. As a software development company we often discuss about the topic, Outsourcing. Now are there any mines hidden that can explode to create a dent in the software or the outsourcing market as such? If so let us find out the major issues or assumptions that has led to the misconceptions of outsourcing. 2.Issues regarding Outsourcing a. b. c. d. Selecting a bad outsourcing vendor Fear of whether the work is managed in the most effective way. Job losses Low Productivity
These are some of the issues regarding outsourcing, from the following statistics and you can arrive at your own conclusions. 3.Statistics
Outsourcing of IT and other business processes is likely to move from a 2005 average of 12 per cent of organizational costs to 20 per cent by 2008.
Innovative new value propositions for outsourcing will emerge and suppliers as a whole will become increasingly more creative in illustrating profitable business models that demonstrate value creation for customers. Allaying fears about the outsourcing backlash, the study states that clients will transcend the hype and fear of outsourcing and as the market matures, clients will come to understand the power and benefits of strategically managed outsourcing initiatives, as opposed to concentrating on the FUD (fear, uncertainty and doubt) that has been inflated by the media.
4.Advantages
Increased Productivity
While taking into consideration of the low productivity factor, Outsourcing helps the business to concentrate on their core competent areas. Usually there is concept in software developers mind that an entire application should be developed in one place. A situation arises where the growth of a company wholly depends on the developers rather than the management team. This leads to low productivity, low quality, viruses, bugs etc, since no one is concentrating on their core competencies. There is a cost saving of 40-60 per cent, quality improvement of 3-8 per cent and productivity increase of 20-150 per cent. This explains as to why a large number of companies from the USA and the UK have already established their offshore operations in India and are outsourcing their work from India. 5.Media Highlights What the media speaks about outsourcing…...
By Zubair Ahmed BBC correspondent in Bombay .Despite Western backlash against job outsourcing,
the Indian software industry was in a buoyant mood as it gathered for its annual conference in Bombay.
The Indian software industry is optimistic as the pace of its expansion accelerates. India's hi-tech sector is now growing at 30% a year. Win-win situation" is the cliché often heard at Indian high-tech business conferences. But this time, Nasscom claims there's a ring of truth to it.” It’s a win-win situation for countries which allow outsourcing and the countries which receive outsourcing", says Nasscom chairman Som Mittal.
UK government support It was a theme the conference returned to over and over. And there was unexpected support from a surprising source, the British e-commerce minister, Stephen Timms. Despite the increasingly loud complaints from British trades unions against the jobs flight to India, Mr. Timms told the conference that his government had no plans to prevent British firms outsourcing work to India or elsewhere.
"In the UK we believe in free trade and we practice what we preach," he declared. Mr Timms also announced yet another hefty outsourcing contract for Indian companies to help modernise IT systems for Britain's National Health Service. The UK government's hands-off policy was welcomed by delegates, given the increasingly frenzied debate over the flood of call centre jobs heading east. American legislation
Neeraj Bhargav, chief executive of WNS Global Services, said that the change was inevitable: "Thirty years ago, the same thing had happened in manufacturing in Britain. There were massive job losses. Has Britain suffered? Their economy for the last ten years has been doing very well," he said. Interestingly, Indian industry also claimed not to be worried by new US government legislation prohibiting outsourcing. These, they said, apply only to American government contracts, which account for just 1% of the total volume of India's outsourcing trade. And Nasscom insists that the tide will turn. "It's the election year both in India and the US and democratic governments have their own compulsions," says Mr Mittal. Official projections for the Indian IT sector's exports at the end of the current financial year, ending March, are $12bn. That's forecast to rise by another $3bn in the following year. Nasscom ambitiously forecasts that the outsourcing sector alone will be a $15bn industry by 2008, up by a staggering $12bn compared to current earnings of $3bn. These optimistic forecasts come just days after Britain's busiest telephone number, its rail enquiry service, announced it was outsourcing half its 50 million calls per year to India. That adds to the several thousand British jobs already created in India by 30 companies ranging from leading banks such as Lloyds TSB, HSBC and Abbey, to insurance firms such as Aviva (Norwich Union). 6.Conclusion There has been quite a speculation about outsourcing, but going through the facts given above one has to figure out whether there exists something like “outsourcing fears”. Change is inevitable and being prepared to accept change breeds success. So if you are an outsourcing company with professionalism, definitely you will make it to the big league. Speaking in simple terms if you can get the work done smoothly without giving your client headaches and heart attacks, then future looks bright.