OUTSOURCING 5.
Part-based activities
o Automobile components
Everytime we buy something from o Cruise ship rooms
somebody rather than producing it o Airplane avionics
ourselves, we have essentially o Desktop build and configuration
“outsourced” the production of that good
or service. WHAT IS BEING OUTSOURCED?
Contracting of a service provider for the
delivery of a process or service. 1. IT services
a. Application Development
WHY COMPANIES OUTSOURCE? b. Application Maintenance and
management
1. Better Performance c. Cloud Services: shared data
o Use of specialized external storage facilities, database
providers which can deliver management
service with better quality, d. Helpdesk
innovation, in new platform: e. Production technical/systems
Sales force providing web- support
based sales management f. Production/data center operations
PeopleSoft providing g. Software as a service (Saas):
employee-facing tools shared application software
2. Capacity Management 2. Routine activities or activities that can
o Need to acquire/buy/hire be automated at larger centers
(temporary) capacity. a. Banks using common/multi-bank
o Demand chasing (one day – 50 core banking services of large
employees needed, next day only technology providers.
10 are needed. b. Small banks outsourcing check
3. Faster and Continuous service delivery processing to larger banks, riding
o Greater output from work being on ATM base of multibank
done around the clock. network.
o Offshoring market research c. Small vendors using Amazon.com
support to locations in reverse as data center, marketing and
time zones. payment processing platform.
o Offshoring processing of bills of 3. Support or Auxiliary services
lading to centers in other time- a. Cafeteria
zones to complete task faster. b. Janitorial Service
4. Lower Cost c. Copy Center
o Replace expensive local or in- d. Building Maintenance
house resources with less e. Trucking/Shipping
expensive resources from external f. Security
service providers. g. Payroll
o Tax differential or government h. Legal
incentive programs in other
locations leading to lower cost.
ADVANTAGE OF OUTSOURCING
Employer Perspective Employee Perspective
1. The service provider (BPO companies) 1. Work Abroad, Live Here
determines most efficient number of Be near your friends and family
resources, process, and supervision to Work in the country and support Philippine
achieve output. growth
2. Service Provider may have more 2. Professional Growth
expertise/capability than the buyer. 3. Financial Independence
Examples: 4. Employee Assistance
Technical Support – Dell, Convergys 5. Enjoy your favorite food
Accounting – JPMorgan Chase & Co., CITI
Animation – Top Draw Animation
3. Buyer can leverage economies of scale of the
service provider.
Examples:
Technical Infrastructure
Human Resources
Technical Expertise
DISADVANTAGE OF OUTSOURCING
Employer Perspective Employee Perspective
1. Cost can be higher 1. Shifting schedule
Because provider may add premium for Possibility to work at night
risk in case processes are not well
defined.
2. Buyer does not have full control of 2. Dealing with irate customers
resources doing work There is training support on how to deal with
irate customers
There is also floor support
Companies provide facilities and activities to
help you unwind
TWO TYPES OF OUTSOURCING
1. Third-Party 2. Shared Service Center (SSC)
Owned by a service provider, a local Wholly-owned by the mother company
entity or part of a global group. Providing services entirely to affiliates
Providing services to clients of the and subsidiaries or more rarely to
services provider. clients of the mother company.
Examples: Examples:
a. Accenture l. Teleperformance a. ANZ Bank
b. AEGIS m. Telus b. Chartis Technology and Operations
c. Convergys Management
d. EGS c. Chevron k. Manulife
e. IBM d. Citigroup l. Shell Shared
f. Sitel e. Dell Services Asia
g. SPi Global f. DKS m. Thomson Reuters
h. Stream Global g. HP
i. Sutherland h. HSBC
j. Sykes i. J.P. Morgan Chase
k. Tale Tech j. Maersk
STRATEGIES FOR OUTSOURCING Disadvantage: Additional
coordination costs, sourcing
1. Multisourcing management, communications
Multiple vendors for client’s Disadvantage: Transfer
outsourced project pricing/tax margin requirements.
2. Crowdsourcing 5. Offshoring
Company puts out a call for a Vendor and clients in different
project; best solution/submission countries
is accepted and contracted. Advantage: Allows company to
Outsourcing to an undefined focus on core business
generally large group of potential Advantage: Fast ramp-up/down
offerers in the form of an open call at reasonable cost
(Jeff Howe) Advantage: Opportunity to
3. Onshoring expand into new areas costs
Vendor in the same home country effectively
as client Disadvantage: Data
Advantages: Allow immediate privacy/confidentiality issues
response: product designers in Disadvantage: Lack of right
same country respond to market business acumen/right market
feedback quickly. knowledge in offshore location.
Advantage: Local contractors have Disadvantage: Cultural
same market knowledge, culture, differences leading to delays and
language, communication style, miscues
minimizes culture issues. Disadvantage: Risk of high
Disadvantage: Risk of attrition in service provider, weak
inadequately selected, trained, staff selection/training.
supervised staff.
Disadvantage: Risk of higher KEY TECHNOLOGIES THAT SUPPORT
attrition (lower business OUTSOURCING
acumen/process knowledge) than
internal staff; less motivation to Video Conferencing:
deliver quality. o HP –Halo (8.5 min. video)
4. Nearshoring o Cisco – Telepresence
Vendor in a country “close” o Sun – MPK20: Project
(geographic or cultural proximity) Wonderland
to client’s home country. Web-based conferencing and workflow
Advantage: Fee for service tools:
variability rather than fixed o WebEx
compensations costs. o MS Windows Meeting Space
Advantage: Significant labor costs o MS Sharepoint
arbitrage. o Google Application
FUNDAMENTALS OF OUTSOURCING
Business Process
Outsourcing Engagement
Issue Management and Managing Outsourcing
Critical Situation Control Transition
BPO Operation
Management
WHAT TO OUTSOURCE o HR, Payroll, Accounting, Financial
IT Outsourcing –
1. Core Activities – Tasks – Processes o IT Technical Support
Primary process or product of the o IT Application Development
business. o IT Application Management
Tasks that deliver the primary o Data Center Operations
product, the unique value o Software as a Service
proposition of the company.\ o Cloud Services
“Essential, defining activities of an Support Functions
organization,” what it needs to o Cafeterias
keep enhancing to improve o copy centers
competitive advantage. o security
2. Non-Core Activities-Tasks-Processes o janitorial services
Support activities, processes, o trucking/shipping
functions o building maintenance
Routine activities
WHAT TO OUTSOURCE
Seasonal Requirements
Well-defined/ documented tasks, standard o One day, 50 employees needed;
outputs. next day, only 10 are needed
o Christmas hires to handle
WHAT NOT TO OUTSOURCE additional volume of transactions
o Temporary extensions of operating
Core Activities-Tasks-Processes hours to accommodate foot traffic
o Design Part-based Activities
o Product Development o These are activities that are:
o Process routine, scheduled, with little
o Recipe uncertainty
o Automobile assembly
TYPICALLY OUTSOURCED ACTIVITIES-TASKS- o Electronics Assembly
PROCESSES o Packaging solutions
o Handicrafts or garments for mass
Business Process Outsourcing (BPO)
production
o outsourcing of entire business
process components.
Lady Joy M. Villasante BSBA – MM – 2 – 1P
Brand Name – “Limner” means a painter or an artist who used to draw or paint
portraits and other artworks. And “Joy”, aside from the fact that it came from my
name “Lady Joy”, I also used to word to Joy to describe a source, cause or a
feeling of great happiness. Therefore, “Limner’s Joy” simply means “the artists’
happiness”.
Letter L and J – The letter L and J stands for my nickname “LJ”. Moreover, it also
stands for the initial of the brand name. As you can see, above the letter L, it has a
diagonal line which represents a table while the letter J with a shape of circle
above of it represents a person. Hence, the illustration portrays an actual situation
of a person who draws.
Background – The color of the logo’s background represents creativity, joy,
vibrancy, and happiness.
