Hi everyone posting this new and fresh article on Outsourcing.
What is Outsourcing?
Outsourcing - A company purchases a product or process from an outside supplier rather than producing it in house.
Outsourcing is subcontracting a service, such as product design or manufacturing, to a third-party company.
Outsourcing became part of the business lexicon during the 1980s.
Note - Subcontracting - A company contracts an outside supplier to produce a product or process to the company specifications.The manufacturing process is controlled and owned by the company
In clear text...
Outsourcing = Subcontracting
Generally outsourcing can be defined as - An organization entering into a contract with another organization to operate and manage one or more of its business processes.
The decision whether to outsource or to do inhouse is often based upon achieving a lower production cost, making better use of available resources, focusing energy on the core competencies of a particular business, or just making more efficient use of labor, capital, information technology or land resources. It is essentially a division of labor.
Reasons for Outsourcing
1. Cost savings
2. Focus on Core Business
3. Improve quality
4. Knowledge
5. Contract
6. Operational expertise
7. Access to talent
8. Capacity management
9. Catalyst for change
10.Enhance capacity for innovation
11.Reduce time to market
12.Risk management
13.Tax Benefit
Outsourcing to India…Beyond Information Technology
Clinical Trials
Medical Transcription
Legal Services
Laboratory Services
Contract Research
Lab outsourcing
Conducting quality control
Testing or other analytical services associated for an industrial site, such as a chemical plant, refinery, consumer product, corporate research & technical center, medical, food processor or other business.
Why India
India is the most preferred outsourcing destination
Cheap Labour
Skilled Workers
Workers are paid peanuts
India has gained confidence of global corporations by exporting high quality brainpower.
More than 80% U.S. companies chose India as their most favored destination for outsourcing. It is now an IT superpower.
Outsourcing to India
ITES : Information Technology Enabled Services
Software development, Data entry, Programming,
Web development services
BPO : Business Process Outsourcing
Medical Transcription, Call Centers
KPO : Knowledge Process Outsourcing
Financial Analysis
LPO : Legal Process Outsourcing
Legal Services
India tops global outsourcing nations list
-Liau Yun Qing, ZDNet Asia Thursday, October 22, 2009
India continues to top the list of outsourcing nations, with six Indian cities in the top 8 outsourcing destinations, according to a global study.
BPO
BPO – Business Process Outsourcing
Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider that in turn owns, administers and manages the selected process based on defined and measurable performance criteria.
Business Process Outsourcing (BPO) is one of the fastest growing segments of the Information Technology Enabled Services (ITES) industry.
Business process outsourcing in India
The business process outsourcing industry in India refers to the services outsourcing industry in India, catering mainly to Western operations of Multinational Corporations (MNCs).
As of 2008, around 0.7 million people work in outsourcing sector (less than 0.1% of Indians). Annual revenues are around $11 billion, around 1% of GDP. Around 2.5 million people graduate in India every year. Wages are rising by 10-15 percent as a result of skill shortage.
Note : As of 20 May 2008 all Indian on-shore workers in the UK and EU are now entitled to the full wage and benefits packages enjoyed by their European counterparts.
Different Types of Services Being Offered By BPOs
Customer Support Services
Technical Support Services
Telemarketing Services
Employee IT Help-desk Services
Insurance Processing
There is always a ‘first mover’ advantage.
Countries like Vietnam, Philippines, Malaysia, China and Central and Eastern European countries offer IT-BPO services at competitive rates; and it is probable that India may lose its low cost advantage.
Such countries are progressively promoting IT-BPO business by offering various incentives and tax benefits.
So developing the Knowledge Process Outsourcing (KPO) becomes imperative.
KPO
Knowledge Process Outsourcing (KPO) is the outsourcing of high-end business functions in an organization. These functions include both core and non-core activities.
India is expected to corner a lion’s share of the overall KPO market. By 2010, India is expected to account for almost 70 percent of global market.
Examples of KPO functions are
intellectual property or patent research
R&D in pharmaceuticals and biotechnology
data mining, database creation
high-end customer/technical support
and a range of analytical services such as equity research, competitive intelligence, industry reports and financial modeling.
LPO
Legal Process Outsourcing (LPO) is one of the value added BPO services which involves legal work that companies outsource to more economical offshore destinations.
Legal outsourcing consists of various processes which can be classified into low skilled quantitative tasks or high end qualitative tasks.
How big is the sector globally?
In the past three years, the legal outsourcing industry here has grown about 60% annually.
According to a report by research firm ValueNotes, the industry will employ about 24,000 people and earn revenue of $640 million by 2010.
Currently many tasks like legal research, pre-litigation documentation, document analysis, preparing software licensing agreements are outsourced to India.
The India Advantage
Law firms across the globe can greatly benefit from offshoring legal services to India.
In India, Professionals are providing patent related services with a resulting fee as little as $2000 as against $8000-$12000 charged by US firms.
The Indian legal system is similar to the legal systems of the UK, US, Canada, and parts of Europe.
Stance of Obama on Outsourcing
Old tax system- "a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, N.Y.,“.
The newly proposed tax laws, which still must be approved by Congress, would affect IT entities that operate operations abroad by disallowing deductions for various offshore business expenses, including payroll
"By denying the payroll deduction, the hope is that it will be more costly to operate offshore and it will give incentives to create jobs in the U.S.,”
So what can happen?
Some of his policies are framed to specifically struck out at the epicenter of Indian outsourcing.
However, the most significant motivation to transfer work abroad is the large difference among salaries in the U.S. and many other countries.
After all, IBM didn’t hire nearly 75,000 employees in India to save tax dollars – it hired them because they cost as little as 1/5th or 1/6th of their American counterparts and often produce the same quality work.
Though US defended its revised tax policies by saying:
“The jobs aren’t coming back to the U.S. as a result of this proposal, The tax proposal is about revenues and that’s it.”
''Bangalored,'' a term that has galloped into dictionaries to describe loss of jobs due to offshoring.
Contribution to India’s GDP
Export IT and Outsourcing account for less than 7% of India’s GDP and USA accounts for 60% of that.
In 2009, seven Indian firms were listedamong the top 15 technology outsourcing companies in the world.
In March 2009, annual revenues from outsourcing operations in India amounted to US$60 billion and this is expected to increase to US$225 billion by 2020.
Impact of Recession
Conventional wisdom says that companies tend to outsource more as growth contracts. While that's often the case at the end of a recession, experts say the opposite may be true early on, as companies scramble to respond to rapid changes in economic conditions.
Outsourcing's Boom Quickly Fades
First the global credit crisis escalated in September. Then the November Mumbai terror attacks made U.S. companies briefly worry about India's long-term security as an outsourcing destination.
Less than two months later, a financial scandal rocked Satyam (SAY), India's fourth-largest outsourcing provider, leaving the future of that company uncertain and raising questions about whether there is enough regulatory oversight of India-based outsourcing providers.
IN A NUTSHELL
BPO sector is a significant contributor of Indian IT industry.
What China has given the world in manufacturing,India has given in service industry.
What is Outsourcing?
Outsourcing - A company purchases a product or process from an outside supplier rather than producing it in house.
Outsourcing is subcontracting a service, such as product design or manufacturing, to a third-party company.
Outsourcing became part of the business lexicon during the 1980s.
Note - Subcontracting - A company contracts an outside supplier to produce a product or process to the company specifications.The manufacturing process is controlled and owned by the company
In clear text...
Outsourcing = Subcontracting
Generally outsourcing can be defined as - An organization entering into a contract with another organization to operate and manage one or more of its business processes.
The decision whether to outsource or to do inhouse is often based upon achieving a lower production cost, making better use of available resources, focusing energy on the core competencies of a particular business, or just making more efficient use of labor, capital, information technology or land resources. It is essentially a division of labor.
Reasons for Outsourcing
1. Cost savings
2. Focus on Core Business
3. Improve quality
4. Knowledge
5. Contract
6. Operational expertise
7. Access to talent
8. Capacity management
9. Catalyst for change
10.Enhance capacity for innovation
11.Reduce time to market
12.Risk management
13.Tax Benefit
Outsourcing to India…Beyond Information Technology
Clinical Trials
Medical Transcription
Legal Services
Laboratory Services
Contract Research
Lab outsourcing
Conducting quality control
Testing or other analytical services associated for an industrial site, such as a chemical plant, refinery, consumer product, corporate research & technical center, medical, food processor or other business.
Why India
India is the most preferred outsourcing destination
Cheap Labour
Skilled Workers
Workers are paid peanuts
India has gained confidence of global corporations by exporting high quality brainpower.
More than 80% U.S. companies chose India as their most favored destination for outsourcing. It is now an IT superpower.
Outsourcing to India
ITES : Information Technology Enabled Services
Software development, Data entry, Programming,
Web development services
BPO : Business Process Outsourcing
Medical Transcription, Call Centers
KPO : Knowledge Process Outsourcing
Financial Analysis
LPO : Legal Process Outsourcing
Legal Services
India tops global outsourcing nations list
-Liau Yun Qing, ZDNet Asia Thursday, October 22, 2009
India continues to top the list of outsourcing nations, with six Indian cities in the top 8 outsourcing destinations, according to a global study.
BPO
BPO – Business Process Outsourcing
Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider that in turn owns, administers and manages the selected process based on defined and measurable performance criteria.
Business Process Outsourcing (BPO) is one of the fastest growing segments of the Information Technology Enabled Services (ITES) industry.
Business process outsourcing in India
The business process outsourcing industry in India refers to the services outsourcing industry in India, catering mainly to Western operations of Multinational Corporations (MNCs).
As of 2008, around 0.7 million people work in outsourcing sector (less than 0.1% of Indians). Annual revenues are around $11 billion, around 1% of GDP. Around 2.5 million people graduate in India every year. Wages are rising by 10-15 percent as a result of skill shortage.
Note : As of 20 May 2008 all Indian on-shore workers in the UK and EU are now entitled to the full wage and benefits packages enjoyed by their European counterparts.
Different Types of Services Being Offered By BPOs
Customer Support Services
Technical Support Services
Telemarketing Services
Employee IT Help-desk Services
Insurance Processing
There is always a ‘first mover’ advantage.
Countries like Vietnam, Philippines, Malaysia, China and Central and Eastern European countries offer IT-BPO services at competitive rates; and it is probable that India may lose its low cost advantage.
Such countries are progressively promoting IT-BPO business by offering various incentives and tax benefits.
So developing the Knowledge Process Outsourcing (KPO) becomes imperative.
KPO
Knowledge Process Outsourcing (KPO) is the outsourcing of high-end business functions in an organization. These functions include both core and non-core activities.
India is expected to corner a lion’s share of the overall KPO market. By 2010, India is expected to account for almost 70 percent of global market.
Examples of KPO functions are
intellectual property or patent research
R&D in pharmaceuticals and biotechnology
data mining, database creation
high-end customer/technical support
and a range of analytical services such as equity research, competitive intelligence, industry reports and financial modeling.
LPO
Legal Process Outsourcing (LPO) is one of the value added BPO services which involves legal work that companies outsource to more economical offshore destinations.
Legal outsourcing consists of various processes which can be classified into low skilled quantitative tasks or high end qualitative tasks.
How big is the sector globally?
In the past three years, the legal outsourcing industry here has grown about 60% annually.
According to a report by research firm ValueNotes, the industry will employ about 24,000 people and earn revenue of $640 million by 2010.
Currently many tasks like legal research, pre-litigation documentation, document analysis, preparing software licensing agreements are outsourced to India.
The India Advantage
Law firms across the globe can greatly benefit from offshoring legal services to India.
In India, Professionals are providing patent related services with a resulting fee as little as $2000 as against $8000-$12000 charged by US firms.
The Indian legal system is similar to the legal systems of the UK, US, Canada, and parts of Europe.
Stance of Obama on Outsourcing
Old tax system- "a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, N.Y.,“.
The newly proposed tax laws, which still must be approved by Congress, would affect IT entities that operate operations abroad by disallowing deductions for various offshore business expenses, including payroll
"By denying the payroll deduction, the hope is that it will be more costly to operate offshore and it will give incentives to create jobs in the U.S.,”
So what can happen?
Some of his policies are framed to specifically struck out at the epicenter of Indian outsourcing.
However, the most significant motivation to transfer work abroad is the large difference among salaries in the U.S. and many other countries.
After all, IBM didn’t hire nearly 75,000 employees in India to save tax dollars – it hired them because they cost as little as 1/5th or 1/6th of their American counterparts and often produce the same quality work.
Though US defended its revised tax policies by saying:
“The jobs aren’t coming back to the U.S. as a result of this proposal, The tax proposal is about revenues and that’s it.”
''Bangalored,'' a term that has galloped into dictionaries to describe loss of jobs due to offshoring.
Contribution to India’s GDP
Export IT and Outsourcing account for less than 7% of India’s GDP and USA accounts for 60% of that.
In 2009, seven Indian firms were listedamong the top 15 technology outsourcing companies in the world.
In March 2009, annual revenues from outsourcing operations in India amounted to US$60 billion and this is expected to increase to US$225 billion by 2020.
Impact of Recession
Conventional wisdom says that companies tend to outsource more as growth contracts. While that's often the case at the end of a recession, experts say the opposite may be true early on, as companies scramble to respond to rapid changes in economic conditions.
Outsourcing's Boom Quickly Fades
First the global credit crisis escalated in September. Then the November Mumbai terror attacks made U.S. companies briefly worry about India's long-term security as an outsourcing destination.
Less than two months later, a financial scandal rocked Satyam (SAY), India's fourth-largest outsourcing provider, leaving the future of that company uncertain and raising questions about whether there is enough regulatory oversight of India-based outsourcing providers.
IN A NUTSHELL
BPO sector is a significant contributor of Indian IT industry.
What China has given the world in manufacturing,India has given in service industry.
I like the topic which has been discuss by you.I have read all the things very carefully, its really a helpful and effective post by
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