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Outsourcing Presentation

Transcript: Outsourcing refers to the way in which companies entrust the processes of their business functions to external vendors. There are many benefits of outsourcing your business processes to destinations around the world. Some of them are: 1. Cost advantages The most obvious and visible benefit relates to the cost savings that outsourcing brings about. You can get your job done at a lower cost and at better quality as well. Due to the difference in wages between 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. There is a cost savings of around 60% by outsourcing your work to India. Plus, the quality of the services provided is high thereby ensuring that low-cost does not mean low-quality. ADVANTAGES Global Pros The technique is a money-saver for the corporations who employ it. Specifically, from a business perspective, outsourcing can potentially: 7. Faster and better services By Group 3 6. Time zone advantage Legal Fees Setting up MSA’s, T’s and C’s, and other contractual agreements General Quality Disputes Morale, Productivity, Product Quality Difference in Time zones Vetting Time Travel Related Expenses Offsite meetings Product Training and Configuration Requirements DISADVANTAGES College education Other advantages of outsourcing (that affect the global economic market) are: Benefits of outsourcing your business processes 4. Higher Income = Higher Standard of Living Hidden Costs 3. Specialization of Skills Companies who outsource may not realize their anticipated or promised gains because of the loss of oversight and control of an outsourced project or business function What is outsourcing? Outsourcing changes the public perspective on a company Quality of Work Lack of information Communication Cultural Differences It can hurt sales/brand name Loss of talented employees Once a product is made overseas it wont have the made in USA tag anymore Trying to contact people or schedule meetings with someone in a different time zone can be very hard. •When internal resources are insufficient for a task, outsourcing to a provider that specializes in that task is a good option. •Outsourcing allows access to the flexibility and creativity of high caliber experts with specialized skills and their quality services without having to manage them. •Acceleration of projects and a quicker time to market are attained when outsourcing to a specialized provider. •There is the availability of knowledge transfer to the in-house staff of a company; and the ability to tap into best practices through outsourcing. •Eliminates the headache of meeting deadlines on non-core functions that can be achieved through outsourcing to service providers who have greater access to a specialized staff. Cost Effectiveness Cons of Outsourcing Lower personnel costs Gain economies of scale Allow focus on the core competencies of the company Free up space in company buildings for other uses Increase speed of delivery for outsourced activities Increase quality of delivery for outsourced activities Free up management time Reduce cash outflow Increase employee productivity One theory on outsourcing states that outsourcing boosts the U.S. economy by stimulating trade and creating more jobs Outsourcing works both ways - many jobs in America are jobs that have been outsourced to America by foreign companies Some companies claim that bilingual workers in foreign-based call centers will benefit people who live in the U.S but who speak English as a second language DISADVANTAGES Calculating how much outsourcing has actually affected the economy is nearly impossible Potential for contractor to outsource work to organizations overseas Could greatly effect profitability Market Share Prevent market competitiveness Allows for competitors access to your ideas Specialization •Risks are shared between the outsourcing company and service provider. Not to mention that contractual obligations is a safer risk with the provider than with an in-house employee. •Specialist providers are able to keep abreast of the latest developments in their field. Also, outsourcing allows smaller firms to do the things for which they cannot justify hiring full-time employees. Legal Fees Setting up MSA’s, T’s and C’s, and other contractual agreements General Quality Disputes Morale, Productivity, Product Quality Difference in Time zones Vetting Time Travel Related Expenses Off site meetings Product Training and Configuration Requirements Cultural Differences 2. Increased efficiency Brand Name 1. Foreign Direct Investment (FDI) LOCAL OUTSOURCING A company might have a certain culture or certain expectations of their employees. When they outsource to another company the views or cultures among employees might be different. Microeconomic Level of Impact Individual Business Model Impact Control and Oversight Potential Loss of IP Confidentiality Loss or Relocation of Jobs Hidden Costs FOCUS ON CORE FUNCTIONS Benefits (Business)

Outsourcing Presentation

Transcript: The H-1B visa program is a non-immigrant workers visa Specifically applicable to foreign labourers in certain specialty fields. The H-1B visa program requires workers to have the minimum education of a bachelors degree or its equivalent The H-1B program is utilized by corporations for the employment of high-skilled labourers whose work involve the practical application of a specialized body of knowledge The information and technology industry being a significant holder in the amount of H-1B visas distributed (Banerjee 431). In 1952 the H-1 non-immigrant visa was first introduced by The Immigration and Nationality Act. In 1990 following the technology boom, the Act was amended and the H-1B visa was created, introducing with it an annual worker cap of 65,000 (Banerjee430). From there the trend has snowballed annually The H-1B visa program was founded on appeals to US Congress: that there was a severe shortage of locally skilled workers in specialized sectors such as the IT industry (Banerjee 430; Sahoo et al. 300). The appeals to US Congress have been made primarily by corporate lobbies Accusations that the program is abused and misused by corporations through policy loopholes to exploit foreign workers for labour cost and flexibility are convincing and well supported. Evidence has shown that H-1B visa employees are paid considerably less than American workers with comparable skills mainly because visa holders lack the bargaining leverage of directly hired workers. corporations avoid having to hire employees directly striping workers of their ability to unionise. employers gain flexibility direct hiring: job stability and benefits. hiring through bodyshops: suffer the trials and tribulations aforementioned. India’s IT services on both fronts; in India and the US. rising demand for wage increases overall worker attrition leading to a potential labour shortage. decline of the Indian advantage rise of IT industries in the Asia Pacific region leveling out the playing field Software Outsourcing/Offshoring Software development has become a highly global enterprise Not necessarily a new phenomenon First outsourcing: Programmers from India recruited to work for Burroughs Corporation in 1974 Software work wasn't offshored/outsourced until the late 1990s Outsourcing VS Offshoring Outsourcing: When work from a major form is contracted out to an independent firm in another country. Finished product is imported by the major firm Offshoring: Involves a similar process, however the firm will establish a smaller subsidiary in another country with local employees to complete the work (Marin) A Brief History: Offshoring/Outsourcing labour wasn't made possible until telecommunications technologies allowed instant collaboration & communication between nations In 1970s, Indian workers recruited to US because there was no internet. Existing internet model, ARPANET was unrefined faulty and slow Computer platforms like UNIX did not have standardized software for firms to contract out programming work Funding in 1990s led to development of internet as it is today Y2K scare plays major role in the beginning of outsourcing/offshoring programming work The Y2K Scare A programming bug theorized over a decade before the year 2000 arrived Software had two-digit date stamps which were fear to be unable to differentiate between the year 1900 and 2000 Mundane programming tasks were contracted out to admirably less expensive labour in India to solve coding bugs Political liberalizations in late 1990s enabled India to undertake these contracts Software currently India's largest export Industry is growing by 20 to 25 percent annually Creating fears that India will absorb software market however... Most outsourcing contracts in India in Applications Development sector This sector accounts for only 5 percent of software market India accounts for only 16 percent of applications development globally! India weak in Research and Development (R&D) sector of software design Have tried to improve on R&D and other value-added outsourced services but are hampered by high illiteracy rates, inaccessible education, substandard infrastructure and heavy government regulations. Ireland alongside Israel have been major players in software development since late 1990s too Regarded as one of the pioneer sites for outsourced/offshored software development Ireland's population= 6 million. 40 percent live in Dublin Telecommunications are a big industry in Ireland, about 3.1 percent of GNP Low tax rates made it attractive for large corporations to offshore software labour there Tax rate only 12.5 percent for businesses! Much lower than rest of European Union Major US firms established secondary firms in Ireland: AOL, HP, Xerox, Microsoft & Intel Europe offshores much of its software labour to Ireland Estimated 60 percent of European software developed or localized in Ireland! Ireland's software recently under threat from cheaper labour markets in Russia, Eastern Europe

Outsourcing Presentation

Transcript: The strategic use of outside resources to perform activities traditionally handled by internal staff and resources Does not have to be abroad, can be purchased from third parties domestically 1. What is the difference between offshoring and outsourcing? 2. Why have companies in the US started to reshore their production? 3. Should these companies continue to reshore or outsource their production? Why or why not? What effect does it have on economic variables such as GDP and NFP? 4. How does outsourcing affect competition? 5. In what ways is the consumer of a business affected by that business outsourcing? (Hint: think about interactions) 6. What effect does offshoring have on both countries involved? 7. What are some alternatives to outsourcing and/or offshoring? Group 14 PAST Legal Fees Setting up MSA’s, T’s and C’s, and other contractual agreements General Quality Disputes Morale, Productivity, Product Quality Difference in Time zones Vetting Time Travel Related Expenses Offsite meetings Product Training and Configuration Requirements Pros US Tax Code Supports Offshoring 5. In what ways is the customer of a business is affected by that business outsourcing? (Hint: think about interactions) A growing number of American companies are moving their manufacturing back to the United States Study by KPMG What is outsourcing? 3. Should companies continue to reshore their products? Why or why not? What effect does this have on economic variables such as GDP and NFP? 1. What is the difference between offshoring and outsourcing? Outsourcing is the New Normal Potential for contractor to outsource work to organizations overseas Could greatly effect profitability Market Share Prevent market competitiveness Allows for competitors access to your ideas Calculating how much outsourcing has actually affected the economy is nearly impossible Top: Meeting compliance requirements Completing paperwork Lowering operating costs Typically the most cited reason for outsourcing Other areas include better automation and improved analytics Legal Fees Setting up MSA’s, T’s and C’s, and other contractual agreements General Quality Disputes Morale, Productivity, Product Quality Difference in Time zones Vetting Time Travel Related Expenses Off site meetings Product Training and Configuration Requirements Cultural Differences Early Adopters Phase Application and maintenance outsourcing is on the upswing Close behind is finance and accounting outsourcing Others include industry specific operations, procurement, HR, and customer services A company might have a certain culture or certain expectations of their employees. When they outsource to another company the views or cultures among employees might be different. Microeconomic Level of Impact Individual Business Model Impact Control and Oversight Potential Loss of IP Confidentiality Loss or Relocation of Jobs Hidden Costs Insourcing Hire students Cheaper Hire specialized workers Hire local freelance workers Late 1980s & 1990s A) Insourcing B) hiring cheaper labor (i.e. students) C) getting input from specialized industry professionals D) all of the above 20th Century A) GNP increases B) GNP decreases C) GNP is constant D) All of the above E) None of the above Outsourcing Present Russian Industrialization Thank you! Commodity Phase Why outsource? OUTSOURCING Works Cited Future is bright for outsourcing Has become an accepted business practice Once considered leading edge, now it is commonplace What is outsourcing? In a study of job-creating in America, McKinsey found that workers for high-level IT support in the cheaper parts of the country cost less than in Brazil or eastern Europe and just 24% more than India Labor costs in different parts of America can vary by as much as 30% Different countries have different security policies that differ greatly Outsourcing Hidden Costs In 2005, ET Water Systems moved manufacturing from California to China In 2010, labor and shipping costs had grown so much, it was cheaper for ET Water Systems to manufacture in California Other companies such as General Electric are slowly and quietly starting to reshore parts of their production Still the numbers are low: The number of firms known to have reshored manufacturing to America is well under 100 2. Why have companies in the US started to reshore their production? Post-Revolution (Japan) Potential Loss of IP Confidentiality After modernization, hired foreign technicians and engineers to set up factory system Taught native Japanese to operate high-tech equipment 7. What are some alternatives to outsourcing and/or offshoring? Outsourcing vs Offshoring Offshoring Sending confidential data overseas is risky. It is hard to track who is seeing your personal information and how it is being handled Does the company shred their confidential documents? Are their employees dealing with the data background checked? How secure are their networks and servers? Product Cycles: S-Curve Remain price competitive Offshoring:

Outsourcing Presentation

Transcript: What is outsourcing? Outsourcing is the contracting out of a business process, which an organization may have previously performed internally to an independent organization from which the process is purchased back as a service. Decades of experience Proven with both large and small clients Scalable program ensures that your company will never be resource-strapped State of the art equity administration processes Inexperience can be expensive Lack of infrastructure Subject matter experts will be available to provide on demand support to resolve any niche customer issues. Every so often Account Managers need an extra set of hands, and our team of SOS administrators are ready and able to provide additional support. Managing Principal Meet your team Due Diligence Outsourcing What's next? Monthly/Quarterly/Annual Reporting This is what we're made of Specialized skill set and high demand set recruiting part time help difficult Mistakes can cost even more Training can be expensive Unless you're in the business of stock administration, odds are specialists can handle your needs more efficiently Daily Transactional events Systems and IT experience necessary for successful stock administration are expensive Part time price Lack of internal experience Provide any additional reports needed for monthly, quarterly, or annual reporting Supported by: SOS Administrators Convenience Full time specialists are hard to come by Sometimes it takes a village and if your Account Manager ever needs additional insight into anything equity related, the SOS team is prepared to provide additional instruction. Update plan, system, and / or participant details Seasonal nature of work leads to periodic windows of increased activity Proposal Review How it works Contracts Proposal Outsourcing Review Plan Processes and Documents/Overlay SOS best practices The SOS Knowledgebase Implementation Questionnaire Prepare employee communications as necessary Ongoing Administration Other Full time employment not necessary Why SOS? Introduce your Account Manager SOS Equity Compensation Specialists References Dedicated Account Manager Distribute confirmations and serve as the employee point of contact Full time Expertise Section 16 Why bother? Implementation Activity reports SOS Outsourcing gives you stock plan certainty Day-to-day administration of your account is handled by a specifically designated SOS Stock Plan Professional. This is your stock plan manager, they just sit with us. Month-end processing and recap Daily Reconciliations Execute daily tasks outlined in the implementation process including: A direct escalation point for your account manager who will provide ongoing support and coordinate additional resources as needed. Coordinate inter-departmental activities

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