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OUTSOURCING

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by

Sara Villegas Araque

on 5 December 2014

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Transcript of OUTSOURCING

OUTSOURCING
CASE OF STUDY
Sara Villegas Araque
STUDYING
International Business
Business Administration
D E F I N I T I O N
THE SUBCONTRACTING OF NONCORE ACTIVITIES
FREE UP CASH
TO
TIME
PERSONNEL
OBJECTIVE
Companies having strengths in other areas may contract
}
data processing
surveillance
REDUCE UNIT COST
ADVANTAGES
WHY DO ORGANIZATIONS OUTSOURCE THEIR BUSINESS PROCESS?
Key Factors:
Lack of expert-labor in some portions of the business process

Availability of cheaper labor
Feasibility to concentrate on the other crucial business process
EMERGING ECONOMIES
DISADVANTAGES
COST
At better quality as well
You can get your job done at a lower cost
and
DUE
to the
difference
in
WAGES
Western countries and Asia
}
the same kind of work that is done over there can be done in India at a fraction of the cost.
LABOR COST
Outsourcing lets you focus on the human resources that you need them most.
Hiring and training staff
Can be very expensive
Many employees don´t always live up to your expectations
FOCUS ON CORE AREAS
Enable you to focus on:
Building your brand
Invest in R&D
Move on providing higher value added services
Eliminates the need for investment in infrastructure
SAVE ON INFRASTRUCTURE AND TECHNOLOGY
As the outsourcing partner takes the responsibility of the business processes and hence develops infrastructure for the same.

round-the-clock business operations
TIME ZONE ADVANTAGE
Get your job done while you are closed for the day and wake up to your service being delivered the next morning
ADVANTAGE
FASTER AND BETTER SERVICE
Decrease the lead time it takes for your product to reach the marketplace
Shift certain responsibilities to the outsourced vendor
RISK SHARING
Market
Competition
Government regulations
Financial conditions
RISK OF EXPOSING CONFIDENTIAL DATA
HIDDEN COSTS
Legal fees to retain a lawyer
The hidden costs involved in signing a contract across international boundaries may pose a serious threat
LACK OF CUSTOMER FOCUS
QUALITY PROBLEMS
INEQUALITY
When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-party
An outsourced vendor may be catering to the expertise-needs of multiple organizations at a time
In such situations vendors may lack complete focus on your organization’s tasks
Delivery time frame
Sub-standard quality
Inappropriate categorization of responsibilities
At times it is easier to regulate these factors inside an organization rather than with an outsourced partner
EXPLOITATION
Employees were committing suicides
FORBIDDEN TO SPEAK TO EACH OTHER
24 PEOPLE CAN SHARE 1 ROOM
Rest day every 13 days
No overtime premium for weekends
They work for 12 hours a day
Initial response to the suicides was to bring in monks to exorcise evil spirits.
Later suggested workers were committing suicide to secure large compensation payments for their families
CASE OF STUDY
POORLY PAID WORKERS
AMERICAN COMPANIES THAT OUTSOURCE JOBS TO: CHINA, INDIA, JAPAN ...
CASE OF STUDY
CONCLUSION
Main objective: Produce undulated fiber cement sheets and its complementary molded products
plasterboard
corrugated roofing sheets
Outsource
JUST CARE ABOUT THE PRODUCTION
Doctor´s diagnoses
12 hour time difference
Medical records
"Few places where you can find surplus English-speaking engineers".
"Source of intellectual advantage"
}
Lab reports
ADVANTAGE
Expertise in communication capabilities
Technical expertise
Favorable financial packages
ADVANTAGES OF OUTSOURCING TO INDIA
"ENSURING A LOW - COST DOES NOT MEAN LOW QUALITY"
Thomas Friedman
STRIKE
dwelling
Disease patient
Full transcript