...International Bus Mgmt Victor Ebong Turn-in September 13, 2011 Offshoring & Outsourcing 1. Explain outsourcing, offshoring, and nearshoring and give the benefits/costs of each. Why are the benefits of offshoring being questioned more recently? (Reading 1) * Outsourcing- The farming out of work or certain duties to an outside organization. It can be to a company outside the country but in most cases when termed “outsourcing” it is being done within the country. The benefits of this are that jobs are not being lost in a particular territory or country and the work is being done at a more cost effective and efficient rate * Offshoring- Is the wholesale shifting of corporate functions and jobs to overseas territories. This may not necessarily mean shifting of the work to a different organization but rather shifting work to organization’s subsidiaries abroad. * Nearshoring- Is a concept similar to offshoring whereby companies shift operations, often IT related to foreign countries that are close to their own. The major reason behind this is that while gaining the labor cost advantage, many of the same languages are being spoken of the parent corporation. Additionally, these operations allow for travel on short notice without jet-lag. * The benefits of offshoring are being questioned now more than ever because of the extremely high unemployment rates here in the US. Many critics believe that those Americans out...
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...Outsourcing is an established business tool that uses the best combination of low cost but high quality local and global resources in order to deliver the best service or product to customers. Using outsourcing services of an outsourcing vendor, small and large companies use one outsourcing service, or more than one outsourcing service, to provide a better customer experience. While outsourcing is an attractive proposition, users of outsourcing services should give careful consideration to thepros and cons of outsourcing while receiving outsourcing services from outsourcing destinations such as India, China, the Philippines, and Brazil, etc. Sure, outsourcing is a way to save money, but there can also be unexpected costs. The decision to outsource is certainly not one that any business or non-business organization should enter into lightly. To arrive at the right decision, users of outsourcing services should analyze the following advantages and disadvantages of outsourcing, as only they are in the best position to ascertain whether a particular outsourcing service or outsourcing services should be outsourced to an offshore outsourcing vendor. The most significant advantages of outsourcing are: Cheaper manpower and outsourcing Manpower is possibly the most important resource in any company, and is also the constant resource that come at a high cost. For this reason, small and large companies undertake outsourcing services to India of various types. Professionals in outsourcing...
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...Competitive Advantage: Global Delivery model Operationally Infosys’s competitive advantage is its Global Delivery Model. Infosys, started off by provided onsite service to its global clients. Later in order to cut costs it began to complete projects at its Indian offshore development centers and then implement them at the clients' places. This posed several challenges. Software development is a highly iterative process and as there was no service provider at the clients' locations, it led to a slowdown in the progress of projects. Frequent changes and miscommunication also increased the delay in completion of projects. This led Infosys to adopt the Global Delivery Model (GDM), which was based on the principle of taking work where it could be done best in an economical manner and with the least amount of acceptable risk. The process architecture of GDM helped software companies to deliver high quality solutions while executing a number of engagements from multiple locations. However the GDM model has become and industry norm and is no longer a sustainable advantage. Infosys is now developing a new framework called the “collaborative model would involve distribution of various aspects of a project based on the competencies of each center, thereby improving and speeding the delivery process. The model makes use of talents and skills from different parts of the world, to deliver various components of the project. For example, software architecture would be done in one...
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...Eric Newton 11/29/14 To Offshore or not to Offshore Outsourcing is a method that is becoming more of a normal business technique each and every year. The root definition of outsourcing is to transfer different operations of business to outside suppliers that provide lower costs. Examples of this would be companies giving an independent accounting firm the right to maintain their books because it may be cost beneficial as opposed to hiring an accounting department. A real life example would be Apple obtaining computer chips from their rival Samsung instead of making their own. In the last couple of decades, many more companies have been utilizing a different form of outsourcing, that is offshoring. Offshore outsourcing is essentially just outsourcing, in different countries where the quality of work may be better or cheaper. Larger companies typically use offshore outsourcing because the cost of transporting items or products overseas wouldn’t seem as material as would with a low-income company. Some different types of offshore outsourcing are manufacturing, research and development, accounting, human resources, and more (IWDRO). One of the more common types is manufacturing, and it is also one of the more controversial because some major companies such as Nike have been known to take advantage of the cheap labor overseas by not obliging to the human rights standards. Is it ethical for companies like Nike to overload all of the dirty work (manufacturing)...
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...Disadvantages of outsourcing: the disadvantages of outsourcing especially offshore outsourcing mainly centralizes on the real-time information and data sharing. It greatly affects the information that is being shared to the main office to and from the business outsource. Outsourcing has a great risk in lack of proper communication and cultural differences. Cultural barriers will greatly affect your most important resource, your man-power. Data and idea theft is also a great risk factor since outsourcing is basically investing your ideas and data to another company. Fraudulent claims of your company will not be that strong especially if the outsourced country is continents away both from where you are and the laws they have in the matter. Lack of control as to the outsourced people would definitely be of a huge factor because your company is not actually controlling the outsourced people since they are employed by the outsource company they are the one who gives the ultimatum to the man-power they have employed. So with this the expected outcome that your company needs are not always reached and quality of service that they provide may not be of what you have set for them. It also would be very time and asset consuming as you would need to find an affordable and high quality service provider. Instead of precious time being spent on other important matters like improvement of service in your company and ideas where the company can invest their time and assets in, it...
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...• The IT-BPM sector in India is estimated to expand at a CAGR of 9.5 per cent to USD300 billion by 2020. The sector increased at a CAGR of 25 per cent over 2000–13, 3-4 times higher than global IT-BPM spend • Leading sourcing destination India is the world’s largest sourcing destination, accounting for approximately 52 per cent of the USD124–130 billion market. The country’s cost competitiveness in providing IT services, which is approximately 3-4 times cheaper than the US continues to be its USP in the global sourcing market Largest pool of ready to hire talent • India’s highly qualified talent pool of technical graduates is one of the largest in the world, facilitating its emergence as a preferred destination for outsourcing Most lucrative sector for investments • The sector ranks fourth in India’s total FDI share and accounts for approximately 37 per cent of total Private Equity and Venture investments in the country Source: NASSCOM; Aranca Research Note: BPM - Business Process Management, USP - Unique Selling Proposition 2013E • Growing demand Growing demand Strong growth in demand for exports from new verticals Expanding economy to propel growth in local demand • • Global footprints IT firms in India have delivery centres across the world; as of 2012, IT firms had a total of 580 centres in 75 countries India’s IT & ITes industry is well diversified across verticals such as BFSI, telecom, retail 2020F Industry value: USD300...
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...University, 1 Towerview Drive, Box 90120, Durham, NC 27708, USA. Tel: þ 1 919 660 7654; Fax: þ 1 919 660 7769 1 Abstract This paper empirically studies determinants of decision by companies to offshore innovation activities. It uses survey data from the international Offshoring Research Network project to estimate the impact of managerial intentionality, past experience, and environmental factors on the probability of offshoring innovation projects. The results show that the emerging shortage of highly skilled science and engineering talent in the US and, more generally, the need to access qualified personnel are important explanatory factors for offshoring innovation decisions. Moreover, contrary to drivers of many other functions, labor arbitrage is less important than other forms of cost savings. The paper concludes with a discussion of the changing dynamics underlying offshoring of innovation activities, suggesting that companies are entering a global race for talent. Journal of International Business Studies (2009) 40, 901–925. doi:10.1057/jibs.2008.92 Keywords: offshoring; innovation; product development; global talent; co-evolution; survey Received: 27 June 2007 Revised: 5 August 2008 Accepted: 6 August 2008 Online publication date: 7 May 2009 INTRODUCTION Outsourcing of manufacturing activities to low-cost...
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...Much of the work being done through offshore outsourcing is in IT, and that is what most of the general public is familiar with. The media has extensively covered the fact that often times a company's 24-hour help lines or 411 operators are actually working in a country on the other side of the world. But there is a wide range of activities that can benefit from this practice. There are labor advantages, and other advantages--huge advantages to rethinking how businesses execute their processes given the technology that's available. It's not just IT. This is important for a wide range of areas including the medical industry. An article I read the author Subramani talks about the 24-hour clock in today's business world and how important it is for companies to take advantage of the complementary time zones that exist. "For example, after doctors see a patient, they typically pick up a tape recorder and take notes. Local workers pick up the tapes, transcribe the notes, and return them within one to two days. Instead, that doctor could send his notes as a digital file when he leaves work at 5 p.m. to an Indian worker who, in that part of the world, is just coming into work. By the time the doctor returns the next morning his notes are transcribed." Subramani's example raises a point about outsourcing that is often at the root of questions today If someone in India is transcribing the doctor's notes, doesn't that take away a job from someone in the United States? It's hard to say...
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...are increasingly demanding accelerated delivery times and lower prices. Companies are focusing on their core competencies and are using outsourced technology service providers to adequately address these needs. The role of technology has evolved from supporting corporations to transforming them. There is an increasing need for highly skilled technology professionals in the markets in which we operate. At the same time, corporations are reluctant to expand their internal IT departments and increase costs. These factors have increased corporations’ reliance on their outsourced technology service providers and are expected to continue to drive future growth for outsourced technology services. 1. Increasing trend toward offshore technology services Outsourcing the development, management and ongoing maintenance of technology platforms and solutions...
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... the more traditional IT outsourcing service lines such as hardware and software maintenance, network administration and help desk services will account for 45 per cent of the total addressable market for offshoring and are likely to drive the next wave of growth. . Service lines that have driven recent growth, i.e., application development and maintenance (ADM) and R&D services are already 30-35 % penetrated and are not as likely to grow dramatically”. The Remote/offshore part was easy with BPO having already paved the way for proving service delivery effectiveness from an offshore location and with the advent of sophisticated tools and technologies that enabled remote IT management the proposition was further solidified. International research firm IDC also declared that “more than 85% of infrastructure components can be managed from a central remote location. These components encompass servers/systems, databases, networks, storage, security, applications and e-business infrastructure. Through managing these components from a remote location, companies can cut down their cost of infrastructure operations and management by 40-60 %, also gaining access to expert ‘skill-on-tap’ on a 24x7 basis” For decades the global giants who had been ruling the Infrastructure Management Services (IMS) market boasted of a very rigid model of service delivery to companies; which is often termed as the ‘Traditional IT Outsourcing Model’. In the traditional outsourcing model, a third party service...
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...………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. CONTENTS TOPIC: i TEACHER’S COMMENT ii CONTENTS iii IMAGE CATALOGUE iv THANK YOU v I. INTRODUCTION 1 II. BACKGROUND INFORMATION 2 1) The concept of Outsourcing and Human Resources Outsurcing 2 2) The situation of HRO in Vietnam 2 III. THE IMPACT OF USING HRO ON VIETNAM’S ORGANIZATION 3 1) The positive impacts 3 2) The negative impacts 5 IV. SOLUTIONS TO HRO IN VIETNAM 5 V. CONCLUSION 7 REFERENCES 8 IMAGE CATALOGUE o Figure 1 HRO services o Figure 2 The HR cost pyramid o Figure 3 HRO saving time (%) o Figure 4 9-step of HRO...
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...The lesson we can derive from this case is that outsourcing is not just a wage difference between two places but skills and attitudes. Finally, there are a large number of US companies buying professional services from Asian countries. Clearly, skilled workers will be found and hired wherever they are. Countries, such as, India, Pakistan and China are good labor pools (Prahalad 2005.) It follows that multinational and global companies will find skilled labor overseas and start operations or buy services in foreign lands. Qua hay The influence of outsourcing should be recognized. Whirlpool, for instance, has a global network, supplies washing machines from Germany, and microwave ovens designed in Sweden that are and made in China while other appliances come from Brazil. Global companies develop first-rate centers of production and design in various countries. Countries that are abundant in human capital with a supplier base have a chance to become first-rate centers. Within this framework, designed to promote a global network, financing depends on corporate profits and funds owned by prospective partners. Du Pont, for instance, raises funds through joint ventures but retains corporate control by retaining at least 51% of the share. The importance of outsourcing and globalization is that some market imperfections are removed. When imperfections are removed, prices converge. This means that factor price differentials in...
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...increase in the offshore outsourcing (offshoring) of jobs in the service industry. Although offshoring is common in the manufacturing industry, it only recently began in the service industry. The recent increase in the service industry has occurred because of new technology and the ability to access information from anywhere. Those who oppose offshoring believe it takes away American jobs, lower wages, and causes declines in America’s standard of living and any benefits from offshoring are unevenly distributed. Offshoring in the industry has not negatively affected the United States. Currently, offshore outsourcing in the service industry has a net benefit to society and there is no reason for concern. Critics charge that the information revolution (especially the Internet) has accelerated the decimation of U.S. manufacturing and facilitated the outsourcing of service sector jobs once considered safe, from backroom call centers to high level software programming. (This concern feeds into the suspicion that U.S. corporations are exploiting globalization to fatten profits at the expense of workers.) They are right that offshore outsourcing deserves attention and that some measures to assist affected workers are called for. But if their exaggerated alarmism succeeds in provoking protectionist responses from lawmakers, it will do far more harm than good, to the U.S. economy and to American workers. Should Americans be concerned about the economic effects of outsourcing? Not particularly...
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...Offshoring Impact on U.S. Software Engineers for Leadership and Organizational Behavior Thesis: In my workplace, we have been outsourcing some technical work to Mexico. It has been interesting the feedback we are getting from our programmers. Although we’re outsourcing only when the work exceeds our capacity, they’re rightly concern about their jobs; they are concern about offshoring. I would like to write a feasibility analysis of offshoring work for my class project. I would like to be specific to “offshoring impact to software engineers”. April 17, 2011 Contents Offshoring Impact on U.S. Software Engineers 1 Contents 2 1 Introduction 3 1.1 Definitions 3 1.2 Summary 3 2 Data Section 4 2.1 Offshoring from a political perspective 4 2.2 Offshoring from a business perspective 7 2.3 Offshoring from software engineers perspective 9 3 Conclusion 11 3.1 Summary of Findings 11 3.2 Recommendations 11 4 Appendices 13 4.1 2008 Projected Base Salary Increases 13 5 Bibliography 14 1 Introduction 1.1 Definitions According to United States Department of Labor, software engineers (job 15-1031) develop, create, and modify general computer applications software or specialized utility programs. Analyze user needs and develop software solutions. Design software or customize software for client use with the aim of optimizing operational efficiency. May analyze and design databases within an application area, working individually or coordinating database...
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...global leader in the "next generation" of IT and consulting with revenues of over US$ 4 billion. Infosys defines, designs and delivers technology-enabled business solutions thathelp Global 2000 companies win in a Flat World. Infosys also provides a completerange of services by leveraging our domain and business expertise and strategicalliances with leading technology providers. Infosys' service offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing .Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing. The GDM isbased on the principle of taking work to the location where the best talent isavailable, where it makes the best economic sense, with the least amount ofacceptable risk. Infosys has a global footprint with over 40 offices and development centers inIndia, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan.Infosys has over 91,000 employees. Infosys takes pride in building strategic long-term client relationships. Over 97% of our revenues come from existing customers. alliance-------------- AlliancesInfosys' services and business solutions are strengthened by alliances with leading technology partners. We recommend technologies...
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