A Contemporary issues in management

On
Outsourcing: Redirecting Job and Work

Prepared by:
Banugariya Happy R.
Class:
M.B.A. SEM - I
Academic year:
2018-19
Roll no.:
20
Seat no:
010019
Guided by:
Dr. Sanjay Bhayani
Submitted to:
Department of business management
Saurastra University, Rajkot
1|Page
 Index
NO Particular PG No

1. Introduction 03

2. Meaning 04

3. Why is Outsourcing Required 05

4. Types of outsourcings 06

5. Pros & Cons 07

6. Why Outsource from India? 10

7. Outsourcing companies of India 12

8. Conclusion 15

9. Bibliography 16

2|Page
  INTRODUCTION:

Outsourcing ("contracting out") shifts tasks, operations, jobs, or processes to an external

workforce, by contracting with a third party for a significant period of time. Businesses typically do
this to reduce costs or improve efficiency. Outsourced functions can be performed by the third party
either onsite or offsite of the business.

Outsourcing is the process of contracting a business function or any specific business

activity to specialized agencies. Mostly, the non-core areas such as sanitation, security, household,
pantry, etc. are outsourced by the company. The company makes a formal agreement with the
agency.

The agency then sends the manpower required to the company. The agency charges the
company for their services and in turn pays wages to their employees. Global competition has given
rise to outsourcing. With the help of outsourcing, companies can focus on their core areas which
leads to better profits and increase the quality of their product.

3|Page
  MEANING:

The practice of having certain job functions done outside a company instead of having
an in-house department or employee handle them; functions can be outsourced to either a company
or an individual.

4|Page
  WHY IS OUTSOURCING REQUIRED? :
There are many reasons why a company may choose to outsource a particular function of
their business, which may include:

Resource Shortages

A particularly strong reason to outsource involves a shortage of a critical resource. This can
be available employees that possess knowledge in a certain area (e.g., engineers), the availability of
raw material (e.g., petroleum or minerals) and an available labor force that possesses a necessary
level of expertise at the right price.

Realignment with Core Business

Some peripheral operations are outsourced frequently. It gives the managers the ability to
concentrate on the core business issues instead of devoting resources to areas that may be necessary
but are not related to the business' core competencies. A good example is a major hospital that
outsources its security operations to an outside company that specializes in security.

Cost Savings
The prices of labor and/or materials keep increasing, and competition keeps forcing prices
lower. If there is an outsourcing solution that can save your company money and overcomes the
disadvantages of outsourcing, these areas should be investigated.

Business Flexibility

Seasonal or cyclical demands that ebb-and-flow put varying demands on the resources of the
company. An outsourcing contract could provide the flexibility needed to stabilize these varying
demands. Example: A business brings in extra accountants during tax season and when being audited
by the holding company that owns the business.

Reduced Overhead Costs

Some functions require a large outlay of money just to get started. This expenditure could be
avoided by contracting with a third party. For example, outsourcing a call center rather than
undertaking a costly expansion to the telephone system and office space to meet increasing customer
service demands.

5|Page
  TYPES OF OUTSOURCING:

 Professional outsourcing:
Professional outsourcing includes any type of specialized, professional services. This
includes legal, accounting, purchasing, and administrative jobs

 It outsourcing:
If you are developing an app, software, or technology then finding the right fit is
much more important than finding a developer that is close to the office. As such, seeking
talent may require you to look into companies in India, Ukraine, Russia, or to find a
developer that specializes in IT.

 Manufacturing outsourcing:
Outsourcing manufacturing involves hiring a manufacturing company to produce your
goods at a cheaper price than you could get if you hired a company in the United States to do
it. A common place to outsource manufacturing is China, and may be a good place to start.

 Project outsourcing:
Sometimes companies need help with specific projects, but don’t need full-time help.
For example, they may need to redesign their website, write an eBook, or get help managing
a paid search campaign. This is where it may come in handy to outsource a project rather than
hire an in-house or temp employee.

6|Page
  PROS AND CONS OF OUTSOURCING JOB:

 The Pros of Outsourcing Jobs

1. Higher Returns on Investment:

Many believe that subcontracting is all about reducing costs, and it can definitely reach
such a goal. But this method of doing business offers a lot more than this. When labor is
cheaper, companies will be able to save money that they can transfer to their consumers. This
can result in higher sales that will lead to better revenue realization. How long before you can
see better ROI? A lot faster than if you were to tap into domestic talent that will cost you
more.

2. Improved Efficiency:
What is great about outsourcing is that you can choose a company or team that
specializes in a particular skill set or knowledge. When subcontracting IT jobs, for example,
you will be subcontracting IT-related tasks to specialists or experts, not just anyone who
knows a thing or two about IT. There are plenty of companies that provide IT services
performed by IT experts. With access to a pool of IT talents, you will be able to operate more
efficiently. Moreover, you can tap a knowledge base for improved and better innovation.

In terms of manufacturing, you will be able to produce more in a short of amount of

time, giving you an opportunity to meet increasing demands. After all, manufacturing firms
are equipped with the tools, skills and knowledge to complete a task, which will save you
from having to build your own assembly line.

3. Increased Speed of Delivery:

With improved efficiency, delivery of products and services can be done quickly and
more conveniently. But because tasks are done in another time zone and holiday schedule,
business operations can still continue even if your office is closed due to a domestic holiday
or because it is after office hours. This is especially true if the outsourcing companies operate
24/7.

4. More Management Time:

When everything is done in-house, there is a huge possibility that some core
competencies are not given as much attention as needed. But if you outsource activities that
are routine, administrative or require specialized skills, you can focus more on core functions
and ensure that your company thrives and succeeds.

7|Page
 5. Ease of Employment Handling:
When things don’t go as planned, you have the option to cancel the contract or just fire
an employee. No need to embroil in labor disputes or be in a dilemma of whether or not to let
go of someone because you have formed a bond. With outsourcing, you can let go of anyone
on the fly.

 The Cons of Outsourcing Jobs

1. Loss of Control Over Business Processes:

If outsourced personnel are working remotely, monitoring them could take time and
effort. Even if there are apps and programs that you can use, there is no guarantee that an
employee is doing the job right until you get the deliverables. What are the odds that your
project is given adequate attention?

You should also be aware of the ‘4x Rule’ in the outsourced labor. That is, expect work to
take four times longer to complete because of possible miscommunication, inaccuracies in
implementation, etc. If work is done in-house, monitoring would be consistent and corrections
can be done right away.

2. Concerns on Privacy and Intellectual Property (IP):

There are rules and regulations about IP and privacy in the U.S., which are respected and
followed by domestic business owners, heads and employees. But if you employ people
overseas or beyond the borders, you are practically leaving yourself unprotected. What are the
odds that someone would copy your product idea or software codes?

3. Quality and Turnaround Time Issues:

This means, delivery of products would take longer, requiring you to create a schedule
where the time gap is reduced if not eliminated. There are also concerns on product quality,
especially on the kind of materials used. Products in China, for instance, have been involved
in many controversies. Even if tags are changed into something else, the knowledge that they
are produced in China can also diminish the trust that consumers have on the items and the
company as well.

8|Page
 4. Job Loss:
As previously mentioned, outsourcing jobs can mean higher domestic unemployment
rate. Some businesses also take advantage by offering work at a rate that is lower than
minimum. If they can get away with it, that is. Basically, what is beneficial to one country
could spell bad news to another, where outsourcing is concerned. This is why there is a need
to find balance in the local economy without costing your company huge overheads.

Outsourcing is both a boon and a bane, depending on who you are asking. Most
companies and contractors see them as advantageous, but there is still a need to determine if
the method will really work for a business. Are you willing to sacrifice one thing to achieve
another?

9|Page
  Why Outsource from India?

In a recent survey, 80% of European and US outsourcing firms ranked India as their
number one outsourcing destination. The National Association of Software & Service Companies
(NASSCOM) also reported that almost half of all Fortune 500 companies choose to outsource
software development to Indian outsourcing firms. Even though many other countries (including
China, Mexico, Ireland and the Philippines) have emerged as major competitors, India has
managed to outmaneuver all others and emerge as the top outsourcing destination. Read our well
researched article on - Preferred Outsourcing Destination - India or Philippines, to know how
India fares in comparison to Philippines. Major differentiators such as certain favorable
government policies, fast-developing infrastructure, and an immensely talented work force are
responsible for the Indian IT outsourcing industry continuing to experience a tremendous growth
rate of 25–30% per year.

 INDIA HAS THE LARGEST TECHNICAL AND PROFESSIONAL

TALENT POOL IN THE WORLD:

India remains unmatched when it comes to its vast pool of skilled and talented human
resources. The country has a population of over 1.2 billion people and around 3.1 million
graduates are added to the workforce each year. India also holds the distinction of being the
largest English speaking nation in the world, larger even than the US and UK combined. Apart
from the vast numbers, is the quality of talent that attracts companies wishing to outsource.
"The attraction of India for us was not only numbers but, more importantly, the quality of the
talent. We've taken on people who are innovative and creative and can really contribute to the
business," says Tom Hyde, STI Upstream business manager (Shell), on why their company
choose India among other countries for their outsourcing needs

 INDIA OFFERS FLEXIBLE PRICING OPTIONS:

The number one reason why India remains a top outsourcing provider is due to the
significant cost savings that companies can achieve. This is mainly because of the wide gap
that exists between personnel costs in India and that of the developed countries. For example,
a good developer in the U.S. can cost anywhere from $50 to $80 an hour (for a full-time
staffer depending on skills and experience). In comparison, the hourly cost of a developer in
India can be negotiated down to as low as $15 per hour. This pricing flexibility allows
companies the freedom and creativity in managing their budget and helps them reap large
profits.

10 | P a g e
  INDIA PROVIDES CONSISTENT HIGH QUALITY SERVICES:
While the cost factor plays a huge role in outsourcing, the consistently high quality
provided by Indian outsourcing firms has also enabled India to remain as the top outsourcing
destination. The National Outsourcing Association (NOA), in its Annual Offshore
Outsourcing Conference, reflected on the trend commonly seen among International
companies who choose India as their preferred outsourcing destination. "Cost reduction was
only part of the reason that companies were considering offshore outsourcing, there were
benefits to be had in time-to-market and quality, leading to an adage that companies initially
chose India to save costs but stayed for the speed and quality!"

 INDIA BOASTS OF THE BEST IN INFRASTRUCTURE AND

TECHNOLOGY:
Modern India is well-developed and offers state-of-the-art telecom, ISP, and cellular
networks in all major cities and towns. Clients are offered the latest and best in software
technology, including customized solutions for various applications such as e-commerce,
business process re-engineering, system migration, legacy system maintenance, system
integration, and much more. Outsourcing companies also maintain uninterrupted
communication channels with clients by providing high-speed bandwidth via satellite
connectivity, submarine cables and fiber optic networks

11 | P a g e
  OUTSOURCING COMPANIES OF INDAI

1. Genpact:

Genpact is one of the major BPO companies in India. Founded in the year 1997, the
company has made rapid progress to establish itself as one of the most trusted names to offer
BPO services in the country. It has its branches in more than 25 countries across the globe.
The company offers its services to more than 100 of the Fortune Global 500 companies.

Among the services offered by the company are human resource services, industrial
solutions, banking and financial services, aftermarket services and risk management services.

2. Tata Consultancy Services BPO:

The BPO segment of Tata Consultancy Services (TCS) is one of the biggest names in
the Indian BPO industry. The BPO segment is responsible for generating 12% of the
company’s total revenue. TCS BPO ranks among the top 10 IT services providers in the
world.

TCS offers a variety of services that include enterprise services, platform solutions,
analytics & insights services, etc. TCS BPO has garnered a name for itself in this sector
through excellent customer services.

3. Wipro BPO:
Wipro is an iconic global brand in the Information Technology sector and has a
presence in more than 175 cities spread across 6 continents. Wipro entered the BPO industry
in 2002. Wipro BPO made its mark in the industry through a combination of operational
excellence, industry expertise and transformation capabilities.

The company offers a wide range of services, including customer management

services, human resource outsourcing and knowledge services.

4. Aegis Limited:
Aegis Limited is a renowned global outsourcing company that was founded in the
year 1985. It has its operations spread across 37 locations in 9 countries around the world.
Aegis Limited has established itself as one of the leading BPO companies in India. The
company is wholly owned by Essar, a USD 35 billion conglomerate.

Aegis offers its services to sectors like healthcare, technology, retail, energy &
utilities and telecom. Some of its services include finance and accounting, human resources
and enterprise applications.

12 | P a g e
 5. Serco Global Services:

Serco Global Services was established in the year 1991. This multinational company
has been the winner of multiple awards for providing quality services. The company has its
branches in various cities of the world.

Serco Global Services delivers an entire spectrum of services like finance and
accounting, consulting, legal services and knowledge services. It offers its services to
different sectors including retail, telecom, healthcare, banking and logistics.

6. Infosys BPO:
Infosys BPO is recognised as one of the leading BPOs of the country. Infosys BPO
Limited is a subsidiary of Infosys and came into existence in the year 2002. Winner of the
National Quality Excellence Award, Infosys BPO operates in several countries across the
globe.

Infosys BPO offers diverse services such as human resource outsourcing, finance &
accounting, customer service outsourcing, legal process outsourcing, sourcing and
procurement outsourcing, digital business services and business transformation services.

7. WNS Global Services:

WNS Global Services is a multinational business process management and
outsourcing company. It came into existence in 1996. Initially the company was an in-house
unit of British Airways and was known as WNS World Network Services. In 2003 the
company began offering Business Process Management solutions to clients belonging to
other industries as well. The company has 39 delivery centres located across different
countries of the world.

The company serves a variety of sectors including healthcare, insurance,

manufacturing, media and entertainment, banking and financial services, consulting and
professional services, shipping and logistics, retail and telecommunications.

8. WNS Global Services:

WNS Global Services is a multinational business process management and

outsourcing company. It came into existence in 1996. Initially the company was an in-house
unit of British Airways and was known as WNS World Network Services. In 2003 the
company began offering Business Process Management solutions to clients belonging to
other industries as well. The company has 39 delivery centres located across different
countries of the world.

The company serves a variety of sectors including healthcare, insurance,

manufacturing, media and entertainment, banking and financial services, consulting and
professional services, shipping and logistics, retail and telecommunications.
13 | P a g e
 9. Firstsource Solutions:

Firstsource Solutions is one of the best companies that offer outsourcing services in
India. Founded in the year 2001, Firstsource Solutions Ltd. climbed the ladder of success
through innovative and value-added business process management services across the
customer lifecycle.

The company provides its services to sectors like insurance, telecommunication &
media, healthcare & publishing, banking & financial services and many more. Its services
include customer management, data processing, collections and consulting.

10.Hinduja Global Solution:

Hinduja Global Solution is a part of the Hinduja Group. The company started its
operations in the year 2000. Today the company has emerged as one of the top BPOs of the
country. The company has its presence in 10 countries around the world. In India the
company has 24 delivery centers spread across different cities.

Hinduja Global Solution offers quality services to various sectors such as healthcare,
insurance, retail, banking, travel & hospitality, telecommunications and media, public sector
and consumer packaged goods.

14 | P a g e
  CONCLUSION

In conclusion, outsourcing is a vital part of a business’s decision. There are various factors
that plays an important part in this decision, such as quality, cost and other factors. Customers also
a part of this decision, too. The world is become more and more worldwide that the countries that
are low-cost may start going up on their prices.

Outsourcing is defined as the act of obtaining semi-finished products, finished products or

services from an outside company if these activities were traditionally performed internally”

Many companies depend on outsourcing to help their business to become more productive
and successful. Many of the outsourcing companies can be found in various parts of the world.
However, call-centers are located in various parts of the world. These call-centers are not getting
paid a lot of money, but they are doing what they are supposed to be doing. Without outsourcing,
many companies will not be doing business because they are depending on outsourcing to help
their business grow. Outsourcing have been around for many years and has increased by a large
amount. Labor costs can be a major factor in outsourcing for companies

15 | P a g e
  BIBLIOGRAPHY

http://www.josephchris.com

https://www.thebalancesmb.com

https://www.businessprocessincubator.com

16 | P a g e