OUTSOURCING

Group members
What is Outsourcing?

Outsourcing -
“the strategic use of outside resources to
perform activities traditionally handled by
internal staff and resources” Dave Griffiths
Reasons for Outsourcing
 Traditional role - reaction to problem
 Reduction and control of costs
 Avoid large capital investment costs
 Insufficient resources available
 Modern role – business strategy
 Allows company to focus on their core
competencies
 Keeping up with cutting-edge technology
 Creating value for the organization and its
customers
 Building partnerships
Why do Companies Outsource?
Areas of outsourcing
 Information Technology
 Operations

Administration
Customer Service 
Finance
Human Resources
Real Estate & Physical Plants
 Logistics

Distribution
Transportation
INDIA
MARKET OPPORTUNITY
MARKET:
 2005: 35%
 2006: 32%
 2007: 38%
 compounded growth 2005–2009 : 27%
 —Population growth: 1.44%
 —Market size: $6,200 million
 GLOBAL COMPETITIVENESS: Average

COMPANIES:
 Cognizant, Infosys, Polaris, Satyam, Tata Consultancy and Wipro
INDIA

•Airlines
•General Electric
•Third party BPO's
•Entry of IT majors
•Emergence of Rural BPOs
•Effect of global meltdown
on Indian BPOs
•Challenges to outsourcing
services in India
 COMPANIES:
Cognizant, Infosys, Polaris, Satyam, Tata Consultancy and Wipro
• India's revenue from offshore outsourcing will likely have
single-digit growth in the fiscal year to March 31, 2010

India's outsourcing industry has been affected by

customers' delay in finalizing outsourcing budgets, and
the overall slower growth of business in key markets like
the U.S

About 60 percent of India's outsourcing exports are from the

U.S., with Europe having the second largest share.

The BPO industry saw revenue growth decrease because the volume of
transactions declined as some industries saw their business flagging.

India's outsourcing industry had exports of about US$47 billion in the

fiscal year to March 31, 2009, with domestic business accounting for
another around $10 billion in revenue
WHY OTSOURCING IN INDIA

1. Cost-effective services
2. High-quality services
3. Time Zone Advantages
4. India’s stable government
5. The Indian Advantage
6. Global organizations’ most preferred
choice
ADVANTAGES
 large labor pool
 driven by a technology
intensive educational system
 Indian firms also offer
transparency in their books
and records
DISADVANTAGES
 Satyam scandal
 Indian companies also
struggle with a very large
turnover rate
 Strained infrastructure
 Poor power capacity and
inadequate connectivity
 lack of privacy and
security
 CHINA

Background of China’s Economy.

Steady growth
Success Story
Impressive Economic Development
ADVANTAGES  DISADVANTAGES
 size  intellectual property issues
 low costs of labor  Copyright protections
 steady investment in the  inter-province competition
development of its
telecommunications
infrastructure. 
Vietnam
 ADVANTAGES  DISADVANTAGES
 Production cost  Government related
 Strong labor pool  Technology
 Stability infrastucture
 Government  Workforce
incentives limitations
 Scale
Future of outsourcing
 Creating a multi-polar world
 Greater control in driving and designing deals
 Utilize technology and outsource to remain
profitable.
 India will show excellence
 Technological power will shift from the West to the
East
 By 2015 China will be No. 1, India No: 2