Mul$na$onal  companies  that  opened  cap$ve  centers  in  India  since  early  2001  230  Value  of  research  conducted  by  Indian  cap$ves  of  mul$na$onals  in  2003-­‐04  $800  million  to  $1  billion  Value  of  research  conducted  by  Indian  cap$ves  of  mul$na$onals  in  2008  (projected)  $11  billion  Call  center  seats  96,000  in  2003;  158,000  in  2004  Source:  NASSCOM  Strategic  Review  2005  Evalueserve  (2004)  IT  offshore  revenue  worldwide,  April  2003-­‐March  2004  $17  billion  (almost  half  from  India,  almost  onequarter  from  Ireland)  (includes  IT  products  shipped  from  Ireland)  UN  Conference  on  Trade  and  Development  (2004)  (as  quoted  on  TurkishPress.com)  percentage  of  world’s  largest  1000  companies  offshoring  business  process  outsourcing  30  Value  growth  in  offshore  business  process  outsourcing  worldwide  (projected)  $1.3  billion  in  2002  to  $24  billion  in  2007  

GSC  

Accenture  

EDS  1.80%  

14.6%  

40.20%  

39.80%  

26.90%  

0.00   10.00   20.00   30.00   40.00   50.00  

GSC  

EDS  

Accenture  

CSC  

Perot  

%  Growth  over  5  Yrs  Perot  

CSC  

Sales  (Date:  2003)  

Opportunity  for  Growth  in  Offshoring   Value  

IT  offshore  revenue  worldwide  April  2003-­‐March  2004  

$17  billion  (half  from  India)  

%  of  Fortune  500  Companies  Offshoring   45%  

Market  value  for  OffShoring  of  IT  Services.   $32  billion  

MulTnaTonal  companies  that  opened  in  India  since  early  2001  

230    

Source:  UN  (2004),  Evalueserve  (2004),  Scholl  World  Investment  Report  (2003),  McKinsey  &  Co.  (2003)  

1.   Offshoring  to  India  Will  SubstanTally  Lower  Direct  Costs  

2.   Offshoring  Requires  EffecTve  Management  of  Indirect  Costs  

3.   Offshoring  Requires  Local  Leadership  and  Sound  ExecuTon  

$355    

$296    

$168    

$336     $336     $336    

0    

50    

100    

150    

200    

250    

300    

350    

400    

2004  

2005  

2006  

Offshoring  Domes$c  

Cost  Savings  $168  

Source:  CIO,  h`p://www.cio.com/ar$cle/29654/The_Hidden_Costs_of_Offshore_Outsourcing.  Harvard  Business  School,.    “Offshoring  at  Global  Informa$on  Systems.,  Inc.    2005.      

Total  Domes$c  Labor  Costs  Per  Year  

($336)  

Time  Period  Considered   10  Years  

Total  NPV  (@10%)   ($2,400.57)  

Tax  Savings  (34%)   $816.19  

Total  NPV  A]er  Tax   ($1,584.38)  Source:  CIO,  h`p://www.cio.com/ar$cle/29654/The_Hidden_Costs_of_Offshore_Outsourcing.  Harvard  Business  School,.    “Offshoring  at  Global  Informa$on  Systems.,  Inc.    2005.      

2004   2005  

Total  Offshore  Labor  Costs  Per  Year  

($75)   ($75)  

Costs  Noted  by  GIS   ($280)   $221  

Turnover  –  High  A`ri$on   ($9.82)   ($2.32)  

Language/Cultural  Differences  

($22.92)   ($5.41)  

Decrease  in  Produc$vity   ($6.53)  

Total  NPV  A]er  Tax   ($1,584.38)  Source:  CIO,  h`p://www.cio.com/ar$cle/29654/The_Hidden_Costs_of_Offshore_Outsourcing.  Harvard  Business  School,.    “Offshoring  at  Global  Informa$on  Systems.,  Inc.    2005.      

$1,584    

$1,032    

$0     $200    $400    $600    $800    $1,000    $1,200    $1,400    $1,600    $1,800    

Domes$c  NPV  

Offshoring  NPV  

(In  Millions  $)  

Source:  CIO,  h`p://www.cio.com/ar$cle/29654/The_Hidden_Costs_of_Offshore_Outsourcing.  Harvard  Business  School,.    “Offshoring  at  Global  Informa$on  Systems.,  Inc.    2005.      

1.   Offshoring  to  India  Will  SubstanTally  Lower  Direct  Costs  

2.   Offshoring  Requires  EffecTve  Management  of  Indirect  Costs  

3.   Offshoring  Requires  Local  Leadership  and  Sound  ExecuTon  

0%  

3%  

6%  

9%  

12%  

15%  

18%  

Week  1   Week  2   Week  3   Week  4   Week  5  

Percen

tage  of  E

rrors  

Upper  Control  Limit  =  

     Lower  Control  Limit  =  

FuncTonal  Program  

Common  Program  Languages  

Rare  Program  Languages  

Strategic  Programming  

1.   Offshoring  to  India  Will  SubstanTally  Lower  Direct  Costs  

2.   Offshoring  Requires  EffecTve  Management  of  Indirect  Costs  

3.   Offshoring  Requires  Local  Leadership  and  Sound  ExecuTon  

Communicate  Vision                      &  ObjecTves  

Select  Manager  to  Oversee  the  OperaTon  

Develop  Quarterly  Monitoring  Processes  

TransiTon  Period  • Create  Strong  Bond  Between  Employees  in  India  and  the  U.S.  

Data  •  Install  Encryp$on  Sooware  

• Keep  Military  and  Government  Work  in  the  U.S.  

Allies  • Protect  From  Unjus$fied  Regulatory        Fines  and  Governmental  Fees  

 

   

 Implement  a  Disaster  

Recovery  Plan  

Daily  Work  Back-­‐ups  

Train  Employees  in  DocumentaTon  

1.   Offshoring  to  India  Will  SubstanTally  Lower  Direct  Costs  

2.   Offshoring  Requires  EffecTve  Management  of  Indirect  Costs  

3.   Offshoring  Requires  Local  Leadership  and  Sound  ExecuTon