...(UMUC) Offshore Outsourcing: Reducing Cost, Sacrificing Quality Nick Blasetti AMBA 600 Ralph Masi May 12, 2015 Executive Summary Offshore outsourcing is a growing trend in today’s business world. Many large, fortune 500 companies are sending a majority of their low skilled jobs overseas to reduce labor costs. This process is leading to many negative impacts on consumers and workers. Consumers are now being put at greater risks and experiencing poorer service, while workers are losing their jobs and struggling to find new ones. Workers are also now forced to interact with many foreign employees. The language barrier between domestic and international employees hinders working relationships, and even decreases productivity. Many companies who initiate outsourcing have received negative reactions from employees and reductions in morale. Even with the very apparent negative impacts of outsourcing, companies are continuing to outsource more and more work. The reason: reductions in labor costs outweigh everything else. Companies may be sacrificing their integrity for increased profits, but with so many companies outsourcing, they really have no other choice. Their workers and consumers may be unhappy, but in order to remain competitive they must follow suit. Consumers and workers will be forced to adapt with the changing times by increasing their skills to avoid losing their jobs. Offshore outsourcing is not going anywhere,...
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...Problems of Offshore Outsourcing Abstract: Offshore outsourcing is one of the hot topics influencing the global environment, politically, economically, and socially. While offshore outsourcing is associated with several benefits, these ventures also pose many risks. In this report, I am going to discuss various factors affecting the offshore outsourcing, including risks involved, the challenges faced by managers in these collaboration initiatives, and solutions that may aid in overcoming those challenges. Executive Summary The report outlines the prevailing trends of offshore outsourcing in a global perspective. The purpose of the report is to provide members of the Executive Board Committee, Educational Testing Service with the information essential for considering offshore outsourcing as a strategic decision. It also highlights the risks, challenges, and potential solutions of offshore outsourcing. Despite its widespread diffusion over the years, management of offshore outsourcing projects continues to challenge organizations. Competitive advantages, such as lower cost, technical knowledge, etc., are key factors to search for external solutions. While offshore outsourcing is associated with several important benefits, it also entails number of risk factors. In order to manage outsourcing decision, it is important to have a clear understanding of various risks posed in collaboration initiatives, challenges faced by managers, and solutions that may allow overcoming some...
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...Offshore Outsourcing Outline I. Introduction a. Identify Riordan technology outsourcing projects for offshore implementation with feasibility analysis items i. Pros ii. Cons iii. Performance Measurements II. Project plan - [Indicate what the functionalities Riordan plans to outsource] b. Customer support c. Research and Development d. Contract Manufacturing e. IT development and support III. Pros f. Expertise of company being used g. Less office space needed for departments h. Less employees on payroll i. More focus on the area assigned because that all that company is focused on IV. Cons j. Less reliability because it is not a part of the company k. Decreased knowledge of company policies l. Does not follow company mission m. Language barriers and miscommunications V. Performance Measurements n. Average turnaround time for issues by priority: This metric ensures service level agreement (SLA) compliance. o. End-to-end response time for issues by priority: This metric ensures SLA compliance. p. Resource utilization: Helps the service provider and customer understand resource utilization and allocation, as well as team effectiveness. q. Defect removal efficiency (IT): This generic QA metric helps evaluate the quality of the deliverables. r. Effort to Actuals variance: This metric evaluates the estimating...
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...Quest for an Organic Approach to Offshore Outsourcing Ask a company which has been outsourcing work offshore, maybe for a year, about how well things are going, and you are likely to get responses such as “Well, we did OK on some projects” to “It is still a new area for us” to “Execution is fine, but we need to figure out how to use this as a strategic tool”. Ask the provider the same question and you will hear responses like “We wish we could get more work” to “We need clients to manage more effectively” to “The client requirements keep on changing and we are held accountable for non performance” etc. Over a few more years, the situation tends to stabilize or the contract is reduced in scope or discontinued. To an SME which does not have deep pockets and time on its side, such uncertainties can lead to irreparable harm. Many companies are advised to invest time and effort to choose an offshore provider with the right technology, management and cultural skill sets, with cost reduction being a basic necessity. However if you have not developed a business strategy that incorporates outsourcing as a key enabler, isn’t it not true that you will use the provider more for tactical one-off projects? Will you be able to leverage the provider’s capabilities and build a strategic partnership? Then again, you already have a running business. And you are trying to retrofit offshore outsourcing, so that it becomes an integral part of your business (or you might be taking a second chance...
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...Offshoring, also known as offshore outsourcing, is the term that is used to describe the practice among companies located in the United States on contracting businesses beyond U.S borders to perform services that would otherwise have been provided by in-house employees in white-collar occupations. The term can be applied to U.S. firms that are offshoring the jobs of blue-collar workers on textile and auto assembly lines, for example, which has been taking place for decades. The extension of offshoring from U.S. manufacturers to facilitate providers has heightened public policy concerns about the extent of job loss and foregone employment opportunities among American workers. This concern was especially relevant to policymakers because of the national unemployment rate persistently exceeding 9% despite the end of the Great Recession in June 2009 . The outsourcing of service sector jobs from the United States was a response to the early 1980s recessions when employers narrowed their focus to the company’s core mission and contracted peripheral activities (e.g., janitorial duties) to other U.S. businesses. The 2001 recession caused employers to seek further efficiencies by tapping into the global supply of labor. U.S. businesses were able to outsource overseas the jobs of white-collar workers in some service providing industries as a result of widely disseminated technological advances that permit low cost, good quality, and high speed transmission of voice and data communications...
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...Offshoring Impact on U.S. Software Engineers for Leadership and Organizational Behavior Thesis: In my workplace, we have been outsourcing some technical work to Mexico. It has been interesting the feedback we are getting from our programmers. Although we’re outsourcing only when the work exceeds our capacity, they’re rightly concern about their jobs; they are concern about offshoring. I would like to write a feasibility analysis of offshoring work for my class project. I would like to be specific to “offshoring impact to software engineers”. April 17, 2011 Contents Offshoring Impact on U.S. Software Engineers 1 Contents 2 1 Introduction 3 1.1 Definitions 3 1.2 Summary 3 2 Data Section 4 2.1 Offshoring from a political perspective 4 2.2 Offshoring from a business perspective 7 2.3 Offshoring from software engineers perspective 9 3 Conclusion 11 3.1 Summary of Findings 11 3.2 Recommendations 11 4 Appendices 13 4.1 2008 Projected Base Salary Increases 13 5 Bibliography 14 1 Introduction 1.1 Definitions According to United States Department of Labor, software engineers (job 15-1031) develop, create, and modify general computer applications software or specialized utility programs. Analyze user needs and develop software solutions. Design software or customize software for client use with the aim of optimizing operational efficiency. May analyze and design databases within an application area, working individually or coordinating database...
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...• The IT-BPM sector in India is estimated to expand at a CAGR of 9.5 per cent to USD300 billion by 2020. The sector increased at a CAGR of 25 per cent over 2000–13, 3-4 times higher than global IT-BPM spend • Leading sourcing destination India is the world’s largest sourcing destination, accounting for approximately 52 per cent of the USD124–130 billion market. The country’s cost competitiveness in providing IT services, which is approximately 3-4 times cheaper than the US continues to be its USP in the global sourcing market Largest pool of ready to hire talent • India’s highly qualified talent pool of technical graduates is one of the largest in the world, facilitating its emergence as a preferred destination for outsourcing Most lucrative sector for investments • The sector ranks fourth in India’s total FDI share and accounts for approximately 37 per cent of total Private Equity and Venture investments in the country Source: NASSCOM; Aranca Research Note: BPM - Business Process Management, USP - Unique Selling Proposition 2013E • Growing demand Growing demand Strong growth in demand for exports from new verticals Expanding economy to propel growth in local demand • • Global footprints IT firms in India have delivery centres across the world; as of 2012, IT firms had a total of 580 centres in 75 countries India’s IT & ITes industry is well diversified across verticals such as BFSI, telecom, retail 2020F Industry value: USD300...
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...International Bus Mgmt Victor Ebong Turn-in September 13, 2011 Offshoring & Outsourcing 1. Explain outsourcing, offshoring, and nearshoring and give the benefits/costs of each. Why are the benefits of offshoring being questioned more recently? (Reading 1) * Outsourcing- The farming out of work or certain duties to an outside organization. It can be to a company outside the country but in most cases when termed “outsourcing” it is being done within the country. The benefits of this are that jobs are not being lost in a particular territory or country and the work is being done at a more cost effective and efficient rate * Offshoring- Is the wholesale shifting of corporate functions and jobs to overseas territories. This may not necessarily mean shifting of the work to a different organization but rather shifting work to organization’s subsidiaries abroad. * Nearshoring- Is a concept similar to offshoring whereby companies shift operations, often IT related to foreign countries that are close to their own. The major reason behind this is that while gaining the labor cost advantage, many of the same languages are being spoken of the parent corporation. Additionally, these operations allow for travel on short notice without jet-lag. * The benefits of offshoring are being questioned now more than ever because of the extremely high unemployment rates here in the US. Many critics believe that those Americans out...
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...Eric Newton 11/29/14 To Offshore or not to Offshore Outsourcing is a method that is becoming more of a normal business technique each and every year. The root definition of outsourcing is to transfer different operations of business to outside suppliers that provide lower costs. Examples of this would be companies giving an independent accounting firm the right to maintain their books because it may be cost beneficial as opposed to hiring an accounting department. A real life example would be Apple obtaining computer chips from their rival Samsung instead of making their own. In the last couple of decades, many more companies have been utilizing a different form of outsourcing, that is offshoring. Offshore outsourcing is essentially just outsourcing, in different countries where the quality of work may be better or cheaper. Larger companies typically use offshore outsourcing because the cost of transporting items or products overseas wouldn’t seem as material as would with a low-income company. Some different types of offshore outsourcing are manufacturing, research and development, accounting, human resources, and more (IWDRO). One of the more common types is manufacturing, and it is also one of the more controversial because some major companies such as Nike have been known to take advantage of the cheap labor overseas by not obliging to the human rights standards. Is it ethical for companies like Nike to overload all of the dirty work (manufacturing)...
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...Disadvantages of outsourcing: the disadvantages of outsourcing especially offshore outsourcing mainly centralizes on the real-time information and data sharing. It greatly affects the information that is being shared to the main office to and from the business outsource. Outsourcing has a great risk in lack of proper communication and cultural differences. Cultural barriers will greatly affect your most important resource, your man-power. Data and idea theft is also a great risk factor since outsourcing is basically investing your ideas and data to another company. Fraudulent claims of your company will not be that strong especially if the outsourced country is continents away both from where you are and the laws they have in the matter. Lack of control as to the outsourced people would definitely be of a huge factor because your company is not actually controlling the outsourced people since they are employed by the outsource company they are the one who gives the ultimatum to the man-power they have employed. So with this the expected outcome that your company needs are not always reached and quality of service that they provide may not be of what you have set for them. It also would be very time and asset consuming as you would need to find an affordable and high quality service provider. Instead of precious time being spent on other important matters like improvement of service in your company and ideas where the company can invest their time and assets in, it...
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...increase in the offshore outsourcing (offshoring) of jobs in the service industry. Although offshoring is common in the manufacturing industry, it only recently began in the service industry. The recent increase in the service industry has occurred because of new technology and the ability to access information from anywhere. Those who oppose offshoring believe it takes away American jobs, lower wages, and causes declines in America’s standard of living and any benefits from offshoring are unevenly distributed. Offshoring in the industry has not negatively affected the United States. Currently, offshore outsourcing in the service industry has a net benefit to society and there is no reason for concern. Critics charge that the information revolution (especially the Internet) has accelerated the decimation of U.S. manufacturing and facilitated the outsourcing of service sector jobs once considered safe, from backroom call centers to high level software programming. (This concern feeds into the suspicion that U.S. corporations are exploiting globalization to fatten profits at the expense of workers.) They are right that offshore outsourcing deserves attention and that some measures to assist affected workers are called for. But if their exaggerated alarmism succeeds in provoking protectionist responses from lawmakers, it will do far more harm than good, to the U.S. economy and to American workers. Should Americans be concerned about the economic effects of outsourcing? Not particularly...
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...Much of the work being done through offshore outsourcing is in IT, and that is what most of the general public is familiar with. The media has extensively covered the fact that often times a company's 24-hour help lines or 411 operators are actually working in a country on the other side of the world. But there is a wide range of activities that can benefit from this practice. There are labor advantages, and other advantages--huge advantages to rethinking how businesses execute their processes given the technology that's available. It's not just IT. This is important for a wide range of areas including the medical industry. An article I read the author Subramani talks about the 24-hour clock in today's business world and how important it is for companies to take advantage of the complementary time zones that exist. "For example, after doctors see a patient, they typically pick up a tape recorder and take notes. Local workers pick up the tapes, transcribe the notes, and return them within one to two days. Instead, that doctor could send his notes as a digital file when he leaves work at 5 p.m. to an Indian worker who, in that part of the world, is just coming into work. By the time the doctor returns the next morning his notes are transcribed." Subramani's example raises a point about outsourcing that is often at the root of questions today If someone in India is transcribing the doctor's notes, doesn't that take away a job from someone in the United States? It's hard to say...
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...global leader in the "next generation" of IT and consulting with revenues of over US$ 4 billion. Infosys defines, designs and delivers technology-enabled business solutions thathelp Global 2000 companies win in a Flat World. Infosys also provides a completerange of services by leveraging our domain and business expertise and strategicalliances with leading technology providers. Infosys' service offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing .Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing. The GDM isbased on the principle of taking work to the location where the best talent isavailable, where it makes the best economic sense, with the least amount ofacceptable risk. Infosys has a global footprint with over 40 offices and development centers inIndia, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan.Infosys has over 91,000 employees. Infosys takes pride in building strategic long-term client relationships. Over 97% of our revenues come from existing customers. alliance-------------- AlliancesInfosys' services and business solutions are strengthened by alliances with leading technology partners. We recommend technologies...
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...Outsourcing is an established business tool that uses the best combination of low cost but high quality local and global resources in order to deliver the best service or product to customers. Using outsourcing services of an outsourcing vendor, small and large companies use one outsourcing service, or more than one outsourcing service, to provide a better customer experience. While outsourcing is an attractive proposition, users of outsourcing services should give careful consideration to thepros and cons of outsourcing while receiving outsourcing services from outsourcing destinations such as India, China, the Philippines, and Brazil, etc. Sure, outsourcing is a way to save money, but there can also be unexpected costs. The decision to outsource is certainly not one that any business or non-business organization should enter into lightly. To arrive at the right decision, users of outsourcing services should analyze the following advantages and disadvantages of outsourcing, as only they are in the best position to ascertain whether a particular outsourcing service or outsourcing services should be outsourced to an offshore outsourcing vendor. The most significant advantages of outsourcing are: Cheaper manpower and outsourcing Manpower is possibly the most important resource in any company, and is also the constant resource that come at a high cost. For this reason, small and large companies undertake outsourcing services to India of various types. Professionals in outsourcing...
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... the more traditional IT outsourcing service lines such as hardware and software maintenance, network administration and help desk services will account for 45 per cent of the total addressable market for offshoring and are likely to drive the next wave of growth. . Service lines that have driven recent growth, i.e., application development and maintenance (ADM) and R&D services are already 30-35 % penetrated and are not as likely to grow dramatically”. The Remote/offshore part was easy with BPO having already paved the way for proving service delivery effectiveness from an offshore location and with the advent of sophisticated tools and technologies that enabled remote IT management the proposition was further solidified. International research firm IDC also declared that “more than 85% of infrastructure components can be managed from a central remote location. These components encompass servers/systems, databases, networks, storage, security, applications and e-business infrastructure. Through managing these components from a remote location, companies can cut down their cost of infrastructure operations and management by 40-60 %, also gaining access to expert ‘skill-on-tap’ on a 24x7 basis” For decades the global giants who had been ruling the Infrastructure Management Services (IMS) market boasted of a very rigid model of service delivery to companies; which is often termed as the ‘Traditional IT Outsourcing Model’. In the traditional outsourcing model, a third party service...
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