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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.

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