Wednesday, April 25, 2007

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Sunday, April 15, 2007

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Outsourcing has become a "charged' word. It is an important concept to understand because of its business applications (both for corporations and for small businesses) and because of its political implications. The following is intended as a primer on the main topics related to outsourcing. We have included a (hopefully) balanced summary of the "offshoring debate" without a definitive conclusion as we do not intend to take a political stance on this issue.

Definition of Outsourcing
Outsourcing is the act of obtaining services from an external firm.

Business Process Outsourcing
In the corporate environment, the term “outsourcing” often refers to a particular type of outsourcing, business process outsourcing (BPO). BPO occurs when an organization turns over the management of a particular business process (such as accounting or payroll) to a third party that specializes in that process. The underlying theory is that the BPO firm can complete the process more efficiently, leaving the original firm free to concentrate on its core competency.

Roots of Outsourcing
The concept of outsourcing was first made popular by Ross Perot when we founded Electronic Data Systems (EDS) in 1962. EDS would say to a potential client, "You are good at designing and manufacturing widgets, but we are skilled with managing information technology. We will sell you the IT services that you require, and you can pay us periodically with a minimum commitment of two years.” Today, EDS is a multi-billion dollar company with over 70,000 employees and is only one of many global BPO firms.

Offshore Outsourcing
Offshore outsourcing, or “offshoring”, refers to outsourcing to firms in foreign countries, often to take advantage of labor arbitrage. In the past 10 years, business process outsourcing contracts have increasingly been given to firms in developing countries. Typically educated workers in developing countries, such as India or China, work for a much lower wage than do similarly educated workers in developed countries, such as Japan. Savings from the lower wage rate must exceed the increased costs of management and risk associated with offshore outsourcing for it to be economically viable.

The Politics of “Offshoring”
Offshore outsourcing has recently become a hotly-debated issue in the national media. When the American economy began to pull out of recession in 2001, unemployment did not decrease as expected. Offshore outsourcing was blamed as a contributing factor to this “jobless recovery”. Information Technology was a particularly soft sector, and many American programmers lost their jobs to lower-paid foreign counterparts. Many economists however have recently conjectured that the higher-than-expected unemployment numbers were not the result of offshore outsourcing, and that offshore outsourcing has actually had a positive impact on the American economy. Undoubtedly the debate will continue into the presidential campaign.


The preceding article has been registered under a Creative Commons license.

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Aiming to quell concern from Western users of outsourcing services, India is likely to have a tighter data protection and privacy regime in place later this year. The Indian government is under increasing pressure, from business process outsourcing (BPO) operations and call centres in India that handle large volumes of data from the US and Europe, to pass a data protection law.

If I may, I recommend this highly valuable resource for keeping up-to-date on offshoring:

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"With BPO contracts now accounting for 52 percent of North American outsourcing contract value, as compared to 39 percent in Q1 2003, organizations are sending a clear signal that they recognize the high value-add that BPO can deliver to their internal and external stakeholders, said NelsonHall.

"According to the firm's research, the value of global BPO contract awards in Q1 2004 reached $6.9 billion and accounted for 41 percent of awarded global outsourcing contract value, an increase from 35 percent in Q1 2003. The bulk of BPO contract value (78 percent) was derived from front-office and middle-office related services, with back-office accounting, human resources and procurement outsourcing services representing just 22 percent of global BPO contract value."

STRATEGIC OUTSOURCING INDIA BANGALORE

STRATEGIC OUTSOURCING

Risk Management, Methods and Benefits

Organizations are turning to external suppliers for outsourcing everything from payroll processing to facilities management. The goal is better quality at lower costs, but too often the outsourcing results are disappointing-to-dismal -- simply because many buyers lack a clear outsourcing methodology.

Using the outsourcing concepts in this outsourcingsurvival site, managers responsible for outsourcing will learn to avoid typical pitfalls and ensure success. Readers learn how to:

*
determine core competencies that should be kept in-house rather than outsourced
*
align outsourcing with overall corporate strategy
*
use outsourcing to support transformation strategies such as restructuring and TQM
*
evaluate, compare, and select vendors
*
develop targeted RFPs (requests for proposals), negotiate win-win contracts, monitor how vendors perform, and evaluate financial savings
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handle "recompetition" as contracts end.

Outsourcing Company in india

Note: You are free to reproduce this article in whole or in part on a commercial or non-commercial medium provided that you credit the original source, The Outsourcing Times

Outsourcing has become a "charged' word. It is an important concept to understand because of its business applications (both for corporations and for small businesses) and because of its political implications. The following is intended as a primer on the main topics related to outsourcing. We have included a (hopefully) balanced summary of the "offshoring debate" without a definitive conclusion as we do not intend to take a political stance on this issue.

Definition of Outsourcing
Outsourcing is the act of obtaining services from an external firm.

Business Process Outsourcing
In the corporate environment, the term “outsourcing” often refers to a particular type of outsourcing, business process outsourcing (BPO). BPO occurs when an organization turns over the management of a particular business process (such as accounting or payroll) to a third party that specializes in that process. The underlying theory is that the BPO firm can complete the process more efficiently, leaving the original firm free to concentrate on its core competency.

Roots of Outsourcing
The concept of outsourcing was first made popular by Ross Perot when we founded Electronic Data Systems (EDS) in 1962. EDS would say to a potential client, "You are good at designing and manufacturing widgets, but we are skilled with managing information technology. We will sell you the IT services that you require, and you can pay us periodically with a minimum commitment of two years.” Today, EDS is a multi-billion dollar company with over 70,000 employees and is only one of many global BPO firms.

Offshore Outsourcing
Offshore outsourcing, or “offshoring”, refers to outsourcing to firms in foreign countries, often to take advantage of labor arbitrage. In the past 10 years, business process outsourcing contracts have increasingly been given to firms in developing countries. Typically educated workers in developing countries, such as India or China, work for a much lower wage than do similarly educated workers in developed countries, such as Japan. Savings from the lower wage rate must exceed the increased costs of management and risk associated with offshore outsourcing for it to be economically viable.

The Politics of “Offshoring”
Offshore outsourcing has recently become a hotly-debated issue in the national media. When the American economy began to pull out of recession in 2001, unemployment did not decrease as expected. Offshore outsourcing was blamed as a contributing factor to this “jobless recovery”. Information Technology was a particularly soft sector, and many American programmers lost their jobs to lower-paid foreign counterparts. Many economists however have recently conjectured that the higher-than-expected unemployment numbers were not the result of offshore outsourcing, and that offshore outsourcing has actually had a positive impact on the American economy. Undoubtedly the debate will continue into the presidential campaign.