Outsourcing

Business Administration

Group 5202

Created By: Aukse Rusteikaite

Christine Reeb

Nicole Ilnitski

Outline

Definition

History of Outsourcing

Outsourcing Today

Benefits of Outsourcing

Disadvantages

Frequently outsourced tasks

Types of business sectors usually outsourced

Types of business sectors rarely outsourced

Biggest outsourcing companies

Reasons for outsourcing

Example

Conclusion

Outsourcing is an arrangement

in which work is done by

people from outside your

company, usually by a

company which is expert in

that type of work.

History Of Outsourcing

0

1

2

3

4

5

6

7

8

9

10

1900-sand

Early

1910-s 1920-s 1930-s 1940-s 1950-s 1960-s 1970-s 1980-s 1990-s 2000-s

growth rate Outsorsing Requirment

• Companies didn’t use outsourcing;

• Manufacturers take product from raw

materials stage through the production

themselves;

• Goods shipped by their own resources;

• Products delivered to company-owned

stores.

Industrial Revolution

• Companies started to outsource some services;

• Independent companies opened to serve multiple clients (architecture,

engineering, insurance etc.);

• Located in cities as the companies they were performing services for.

Late 20th century

Outsourcing

Manufacturing • Production of consumer

goods;

• By the 1970s consumer electronics products;

• Once company owners were confident- they could outsource manufacturing functions and shipping.

Outsourcing for

Payroll Services

• Computer companies

were first

• By the end of 1980s

other services started to

be outsourced

• (billing, accounting, and

word processing)

Outsourcing today

0 20 40 60 80 100 120 140 160 180

Outsorsing ,$ million

China Canada UK Romania Russia Ukrain USA India

Companies such as call centres are kept busy from a steady stream of

clients looking to outsource these duties.

When a customer calls an insurance company with a question or a

concern, he or she will likely be speaking with someone who is working

for a separate company, even though that person has been trained to

handle customer service duties.

Many people work as independent contractors providing services to

businesses of all sizes.

Outsourcing is a growing trend that is not likely to slow down in the

future. Some individuals may find that they are laid off from the

company they work for, and are then hired back to that some company

as a contractor!

Benefits of outsourcing

Concentrate

on Core

Activities

Cost and

Efficiency

Savings

Risk

Management

Staffing

Flexibility

Operational

Control

Reduced

Overhead

Quality

/State of the

Art

Transparency

Disadvantages of outsourcing

Quality

Problems

Loss of

Managerial

Control

Hidden Costs

Bad

Publicity

Frequently outsourced tasks

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

35,00%

40,00%

45,00%

Technical

support Development

and

Integration

Call Center

Operations

IT

infrastructure

Data Entry

Training

Web

development

HR

Marketing

and Sales

Other

Companies are looking for ways to streamline their operations

Types of business sectors using

outsourcing

Public Services and Non-Profit

Financial Services

Manufacturing

Business Serivces

Telecomunication

Delivery

Travel / Transport

Trade

Media

Insurance Health Care

Types of business sectors

rarely outsourced

Any company at least once use outsourcing services

Government

Banks

Small trade shop

Start up business

Biggest outsourcing

companies

Top 10 companies, along with the number of outsourced jobs:

63,700 22,400

17,450 15,000

15,000 14,250 14,000

13,000

10,426

10,800

Reasons for outsourcing

Example

Business type: IT services \ Consulting

Project: Description of processes in large company and create

auto documentation based on created process in short time

Outsource: Script developer

In project: Create script-report

Reasons: Company had no sufficient number of experts for

project implementation in periods

Minus: lost management control under outsourcer, additional

requirements have added cost

Conclusion

Outsourcing is often portrayed negatively in the media.

There is no doubt some people are hurt by outsourcing.

The outsourcing theory, however, is intended to be

positive, especially in the long term, as it allows

companies and people to focus on what they do best.

QUESTIONS

When was outsourcing developed?

What kinds of disadvatages of outsourcing do you

know?

Give 3 Reasons for outsourcing.

Which company outsourced the highest amount of

jobs?

Are all business sectors outsourced?