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Published byCharla Horton Modified over 7 years ago
The future shape of business is being redefined through outsourcing
What is Outsourcing Outsourcing means finding better ways of doing business. It helps companies to look to the value chain for high leverage areas and helps them to better utilise their resources to exploit these areas. Outsourcing is a means to achieve competitive advantage by focusing on core competencies.
What to Outsource CRM (Customer Relationship Management) SCM (Supply Chain Management) Back Office –Payroll –Billing –Accounting –Investor Relationship Management – Share Transfer & Fixed Deposit Accounting
Why Outsource Use the specialised services and skills of the Outsourcing partner Better utilise internal resources Increased responsiveness to customer needs Decrease financial risks by reducing capital investments
In-house Vs. Outsourcing – Key Questions Speed and cost for transformation – how long will it take to transform the function or process internally vs. externally? Management attention – should management devote a significant amount of time and energy to this process? Talent – are we putting our best people, with the appropriate skill sets, into these processes?
In-house Vs. Outsourcing – Key Questions Capital – does the function win (or lose) the war for capital within the corporation? Track record – does the function have a track record for meeting or beating its commitments? Accountability – if the transformation is NOT successful, who will be held accountable? Culture – does the function have the right culture to operate the future state model?
Motivators for Outsourcing The followings are the major reasons given for taking outsourcing decisions Difficulty of hiring skilled professionals (28.8 percent), Lack of in-house skills to deliver the desired levels of quality (20.3 percent), Budgetary considerations (13.6 percent), Mandate from the management (11.9 percent).
Risks in Outsourcing Information Security Loss of control Compromising confidentiality Monitoring costs
Minimising Risks Choose a service provider that has a proven track record - talk to customers of the service provider Know your requirements, both current and future, and put them in the contract Stay away from variable costs in the contract like communication, travel etc. Treat the outsourced relationship as a partnership and the employees and extended team members
Minimizing Risks Choose a service provider who provides you with value adds, services or products that may not be in the contract. Develop a strong partnership with the vendor Secure a confidentiality agreement Simplify the interface between the two organisations Focus communications
The Key Layers in Outsourcing Strategy Process Design Operations Systems
The Key Layers in Outsourcing Retain in-house Strategy - governance, policy setting, decision-making and direction Process Design - design, and “consultative” activities The Strategy and Process Design layers are typically retained with the management to ensure overall control of the activity
The Key Layers in Outsourcing Outsource Operations - administration, clerical activities and day-to-day execution System - technology, infrastructure and transactional processing It is these two bottom layers combined - Systems and Administration layers that are most appropriate for Business Process Outsourcing (BPO)
Benefits Service Industry knowledge and expertise of the vendor Quick response time Function Difficult to Manage or Out of Control They are great in a pinch – ability to increase resources whenever required
Benefits Costs Pay only for what you need The infrastructure is of the vendor Economies of scale with the vendor Reduce or Control Operating Costs Outsourcing is a cost-effective way to increase your resources.
Quality and Confidentiality Highest levels of service –Accuracy –Investor Relationship Management Technology Edge –Real time enquiry/feedback management –Web interface for better communication Complete confidentiality and reliability of information Dedicated support systems for investor interface with real time information
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