Case study:

Outsourcing

Group members: Amit Rastogi, Komal,Neha, Ashutosh

 What is Outsourcing?
Outsourcing is the contracting out of a company's
non-core, non-revenue producing activities to
It differs from contracting in that outsourcing is a
strategic management tool that involves the
restructuring of an organization around what it
does best – its core competencies.
Three common types of outsourcing are Information
Technology (IT) outsourcing ,legal process outsourcing (LPO)
and Business Process Outsourcing (BPO). BPO includes
outsourcing related to accounting, human resources,
benefits, payroll, and finance functions and activities. All
these activities fall under broad category of Knowledge
process outsourcing (KPO)
 Business Process
Outsourcing (BPO)
“Business process outsourcing (BPO) is
a form of outsourcing which involves
the contracting of the operations and
responsibilities of a specific business
function to a third-party service
provider “ .
(5)
Resource-based strategic approach means that the firm must understand its
resources and capabilities, select the strategy that exploits key strengths
and develop and enhance them, while managing key weaknesses (8).

Value Chain
The value chain analysis is
Analysis essential in order to identify the
resources and capabilities that
are involved in each stage of
the value chain. At this point
the firm must appraise
resources and capabilities
according to 2 criteria:
- strength and weaknesses
- importance (9).
The most important threat for a firm is
to manage key weaknesses . (10)
The most decisive and
successful way to
Advantages of BPO:
• Cost saving
• Time saving
• Refocus energies on strategic and core
issues
• Access to world-class capabilities
• Risk mitigation (11).
 Oppornuties for
Indian
NASSCOM-McKinsey published
2005 on Indian BPO segment
a reportBPO
in

•Adopt business models, focus and approach

•Areas of focus–customer care, HR,
administration
•Sector of focus-banking and insurance
•Other areas-
Telecom,Manufacturing,Transportation,Retailin
g,Utilities,Automotive,Pharmaceuticals
REASON FOR
GROWTH
Enrollment
•19 million in high schools and 10 million in pre graduate
degree course
Pass-out
•2.1 million graduates and .3 million postgraduates
•Huge chunk of population opt for IT industry.17
million people available to the IT industry by 2008.
ITES-BPO Spending pattern
ITES-BPO Spending by Segment 2001-06
Comparisions with other
countries on IT services
 HUGE POOL OF
MANPOWER
•Large Human Resource
India’s key strength for the growth of software is the industry
large human resource. Indian software industry employs more
than 450,000 programmers and the qualified labour pool grew
more than 15 percent annually.

•Indian Education System

The Indian education system places strong emphasis on
mathematics and science, resulting in a large number of science
and engineering graduates.

•Quality Manpower
Indian programmers are known for their strong technical skills
and their eagerness to accommodate clients.India also has one
of the largest pools of English-speaking professionals
 
GOVERNMENT POLICIES
Government has taken several initiatives to promote the development
of IT:

 The reforms have reduced licensing requirements and made foreign

technology accessible.

 The reforms have also removed restrictions on investment and made

the process of investment easier. The government is actively
promoting FDI, investments from NRIs.

 Till 1994, DOT(department of telecom) was the sole provider of basic

telecom services in India. The new National Telecom Policy has
opened the field for private participants.

 The Ministry of Information and Communication Technology is

GOVERNMENT POLICIES
 Tax rates have been rationalized and tax laws have been simplified.
 The Ministry of Information Technology has set up a National Venture
Fund for the Software and IT Industry with a corpus of Rs. 100 crore
in association with the Small Industries Development Bank of India
(SIDBI) and Industrial Development Bank of India (IDBI).
Emphasis on quality
qfirms adhere to (PCMM).
P-CMM) is a maturity framework that focuses on
continuously improving the management and
development of the human assets of an
organization.
316 firms adopting this certification.
Indian firms manage the software firms of over 255
Fortune 500 companies.
 Future projections
for India
IT & IT enabled services exports will account
for more than 30% of foreign exchange inflows
Increased employment opportunities.
(0.5to2mn).
In ITES exports ( increased job opportunities in
customer care ,H.R & administration)
IT Enabled Services
These services provide a wide range of career
options that include opportunities in call
Centres, medical transcription, medical billing
and coding etc.
Demand of IT Enabled Services:
Driven by the increasing trends of companies
becoming more and more direct and
personalized in their sales and service
approach to their customers.
Advantages of ITES
Location attractiveness :
Significant investment in infrastructure with the
establishment of Technology Parks like Hitec
city Hyderabad, Tata-Singapore Consortium
Bangalore, Tidel Park Chennai, etc.
People attractiveness
Spread of BPO in India
BPO Services in India are spread around cities
where basic IT and Communication (ITC)
infrastructure exists and is being developed.
Advantage North East
career opportunities such as Attractive financial/
tax and infrastructural incentives, Significant
number of English speaking people,Education
infrastructure, Workforce quality, IT / telecom
infrastructure and Low attrition rates.
Challenges for ITES
industry
Ø Increase access to customers.
Ø Developing credibility.
Ø Build a vibrant domestic market by encouraging
FIs, banks , MFs , telecom Co. to outsource assess
& billing processes.
Ø Talent pool creation, through training &
certifications.
Ø Use new technologies to reduce costs.
Ø Enhance service quality .
Thank You!

© Seth Associates, 2007 All Rights