Using any third party vendor to provide

services previously provided by regular

employees

 vendor may absorb the firm's current staff

and assets or may use its own staff and assets
(or some combination of both)
 work may be performed on site or at a
remote location (either domestic or overseas)
 Typically, outsourcers for software
applications perform custom development,
maintenance, reengineering, porting,
integration, and other tasks.
 IT infrastructure outsourcers provide such
activities as data center operations, network
operations, backup and recovery services, and
administration services.
 Business process outsourcers may offer call
center services, or specialize in back-office
tasks like billing and invoicing.
 software development
 software maintenance
 data storage management services
 system administration services
 end user support of desktop PCs, laptops,
and handheld devices
 web site, or application hosting
 Provide services that are scalable, secure, and
efficient, while improving overall service and
reducing costs
 Savings in Labour Cost
 same jobs were to be done at a far lower price by equally
skilled personnel
 Growing Global and Local Market Shares
 even if they do not outsource, their rivals will and gain in
terms of profitability and lower costs
 Communications
 telecommunication networks and lowering of telecom
costs across the world
 Speed
 reduce their turn around times by taking advantage of
the time difference between countries
 Tax Breaks
 companies can defer payment of tax on profits earned
abroad for an indefinite period
 Move to Higher Segments of the Value Added
Chain
 helps the higher income earning countries to move to
higher segments of the value added chain as they are
now free of some tasks that have been outsourced
 Profitable Use of In-house Resources
 frees a large pool of in house resources for other work
 Focus to Accelerate Business Transformation
 passing on various specialized jobs to the outsourced
vendor and focusing on the core business
 Access to Skill Sets and World-wide Capabilities
 access a worldwide pool of workers equipped with a
range of skills
 Reductions of Risks
 large investments in their operations and have to
deal with a number of economic and political
changes, which may prove risky for their
businesses
A term for outsourcing any function engaged in
by an organization that isn't its primary core
business activity
for law firms, this means any function that is
not the actual practice of law
 outsourcing to a foreign country outside of
the native country

 domestic outsourcing; limiting the scope of

operations to native country locations,
usually in smaller, underserved cities with
untapped labor pools
 outsourcing to offshore vendors in
neighboring countries.

 Outsourcing from US to Canada or Mexico;

instead of offshore vendors in countries such
as India.
 Taking back in-house functions that were
previously outsourced.

 sometimes referred to as back sourcing

Re-engineering an existing process or
function to improve performance and
decrease cost; leverages third-party expertise
for a limited period of time; long-term goal is
for the organization to achieve self-
sufficiency before the outsourcing contract
ends.
 Focus
The focus of TO is on long-term improvements in business performance in all
organizational levels, measurable results and an established partnership between
the executive parties.
 Success
The success of TO is based on a collaborative effort to optimize the supply chain
and overall business performance. Optimizing the relations with its
partners/suppliers is a key aspect in improving the entire supply chain
performance, a key success factor in realizing sustainable value creation.
 Appliance
TO is best applicable to an organization with an Enterprise Architecture (EA).
Without this sound, flexible and adaptive business architecture, there is no
possibility for applying TO
 Whatever your company's human resources requirements, there's an HR
outsourcing firm out there to meet those needs. Some HR outsourcing firms are
generalists, offering a wide variety of services, while others are specialists,
focusing on specific areas such as payroll or recruiting. Depending on the size of
your business and how much control you want to maintain over HR functions, you
can either outsource all your HR tasks or contract for services a la carte.

The basic services offered by HR outsourcing firms may include:

 Overseeing organizational structure and staffing requirements

 Recruiting, training, and development
 Tracking department objectives, goals, and strategies
 Employee and manager training
 Benefits administration
 Employee orientation programs
 Can be onshore or offshore; may be
integrated into the organization, organized
as a separate entity owned by the
organization, or entirely outsourced;
 Reduce overheads, free up resources
 Minimize capital expenditure
 Eliminate investment in fixed infrastructure
 Offload non-core functions
 Redirect energy and personnel into the core
business
 Free your executive team from day-to-day process
problems
 Focus scarce resources on mission-critical projects
 Get access to specialized skills
 Reduce need for internal commitment of
specialists
 Save on manpower and training costs
 Control operating costs
 Improve efficiencies through economies of scale
 Obtain needed project management and
implementation consulting expertise
 Acquire access to best practices and proven
methodologies
 Spread your risks
 Avoid the cost of chasing technology
 Leverage the provider's extensive investments in
technology, methodologies and people
 Reduce the risk of technological obsolescence
 Loss Of Managerial Control
 outsourcing company will not be driven by the same
standards and mission that drives your company
 Hidden Costs
 Any thing not covered in the contract will be the
basis for you to pay additional charges
 you will experience legal fees to retain a lawyer to
review the contacts you will sign
 they are the ones that write the contract
 Threat to Security and Confidentiality
 Quality Problems
 outsourcing company will be motivated by profit
 you will lose the ability to rapidly respond to changes
in the business environment. The contract will be
very specific and you will pay extra for changes
 Tied to the Financial Well-Being of Another
Company
 Bad Publicity and Ill-Will
 · The particular task(s) isn’t your core competence and is not a main
part of your business. The task will not generate any profits and is not a
source of competitive advantage. Example: you own an online store which
generates its income selling products and you want to rank higher in the
search engines. You should consider outsourcing Search engine
optimization(SEO) to a specialized company or individual.
 · The task is repetitive or routine that wastes your time and keeps you
from doing what you are supposed to do. For example if you are running a
small business you should consider outsourcing your accounting to a
professional accountant.
 · The task is only a one-time need or repeats in regular intervals. For
example, you want to have a complete redesign of your website. Learning
web design would not really be an option so outsourcing would be the
solution.
 It’s cheaper to hire someone to do it rather than doing it yourself. There is a
very serious pitfall to this: most people don’t value their time correctly. Most will
prefer to spend 10 hours submitting their websites to directories for SEO instead of
paying someone $50 to do it. Is your time worth $5 an hour? Think about how
much you could do to promote your business in those 10 hours, especially if you
are not that familiar with SEO. You are better off hiring someone who has the right
tools and expertise to carry out your task faster and more effectively.
 · The task could be done by you or your employees cheaper but takes up
resources that could be better used elsewhere. This is a tricky one: there are
only 8 hours in a working day for most businesses and during those hours you and
your employees need to do your everyday tasks: sell, promote, innovate, manage
and take care of your customers. If a task comes up that will keep you from
carrying out your core work, you are better off outsourcing it, even if it costs more
than doing it in-house.  Otherwise you might be hurting your business by
neglecting important tasks and details.
 The skill needed to carry out the task is so specialized that
it does not make sense to have a regular employee or you do
it. There are so many little things that can come up and you
simply cannot afford to have a regular employee specialized
for each task just in case….For example, if you are running a
2 person business servicing home PCs and someone comes
along asking you to fix his powerful server, you might be
better off outsourcing it to someone else.
 · The task is one that people don’t like doing. A very
simple example: if you don’t like cleaning your house then
you hire a cleaner to do it for you!
 Customers generally think about these aspects when selecting an
outsourcing supplier:

1.Quality assurance:
2.Cost:
3.Additional resources and capabilities:
4.Prior work:
5.Contract terms:
6.Confidentiality:

In addition to these criteria, other parameters such as location, reporting

methodologies, vendor processes, financial stability of the vendor and
cultural similarity play a vital role in deciding the supplier.
 Outsourcing is not necessarily a matter of
making a right or wrong decision but rather a
situation of determining what is the
optimum decision for an organisation.
 Outsourcing involves getting work from an external firm which has limited knowledge about
the customer's internal processes and operations. Hence, a customers needs to pay attention to
certain considerations, apart from selecting the right vendor, to achieve outsourcing success.

These considerations include the following:

1.Setting the right expectations:

2.Benchmarking methodology:

3.Experience in handling outsourcing projects:

4.Internal resistance:

There are so many companies in this industry like call centres India were ready to change the
dimensions of this industry. Call centers India believe is a rigorous quality procedures and cost