Outsourcing Presentation - New Jersey Technology Council Webinar
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Transcript of Outsourcing Presentation - New Jersey Technology Council Webinar
72 Summit AveMontvale, New Jersey
Phone : (201) 802 9800http://www.datainc.biz
Outsourcing
Outsourcing Overview
Overview – Transfer Management /Execution of a business function to an external Vendor
Drivers – Cost Savings (Labor Arbitrage)– Focus on Core Business– Cost Restructuring (Fixed to Variable)– Better Access and Utilization of Knowledge/Experience/Talent– Access to Operational Best Practices– Transfer risk of excess capacity to Vendor– Use external knowledge to enhance in-house innovation– Reduce Time-to-Market– Risk Management (Mitigate risks with outsourcing partner)
Process – Strategic Decision to Outsource– Select Vendor (RFP, Negotiation, Contract)– Transition (Staff Transfer, Service Take-on)– Transform (Execute Projects, Implement SLA, Reduce Total Cost of Ownership)– Ongoing Service Delivery– Periodic Benchmarking
Outsourcing – IT (Rationale)
ReasonsIT is a Strategic AssetIT is a Key Driver of High Performance
BenefitsReduce CostsReduce Total cost of OwnershipTransforms organization’s IT capabilityImprove Service, Quality, Delivery CapabilityEnables a broader strategic agenda
Outsourcing – IT (Profile)
Application OutsourcingApplication DevelopmentApplication TestingProduction SupportApplication MaintenanceEnhancements / UpgradesLegacy Modernization
Infrastructure Outsourcing IT Spend Management (Assets, Procurement)Data Center ServicesService DeskSecurity ServicesNetwork ServicesWorkplace Services
The Maturing of Outsourcing1st Generation – Select a Single Large Vendor and contract large-sized ‘take-all’ deals:
Gain competitive advantageReap quick benefitsSave timeEasier management overheadLeading to risks and challengesCost and SLA Targets not met
“The prevalence of IT outsourcing megadeals valued at $1 billion or more dropped 67% …” according to Gartner Inc.
Multi-Sourcing – Allocate separate IT functions to different vendors:Leverage the skills and value propositions of each vendorEnhance efficiencyReduce riskOperational Level Agreements provide service governanceNo loss of control owing to monopoly by vendorPick ‘best-of-breed’ solution providers for specialization and domain knowledge
Outsourcing and Off-Shoring
Outsourcing and Off-Shoring had distinct identities:Outsourcing = Work done by a vendor within the ‘industrialized world’Off-Shoring = ‘Third World Country’ did mundane tasks at a much lower cost
Offshoring to...America? "With the continued decline in value of the dollar and sluggish employment, I would expect to see more U.S.-based sourcing solutions evaluated by private and public sector clients across the globe," says Peter Iannone, EquaTerra's executive director for the Americas. CIO, December 2009
Global Sourcing has Matured
Decision Makers make Strategic choices of Where, What, How and Whom based on:Cost ManagementSkillsExperienceValue Proposition to enhance efficiency and reduce risk
The Global Marketplace (Characteristic)
Information
New Ideas Expertise
“Outsourcing is less about labor arbitrage and more about access to Global Talent that is available”
Globalization “CONNECTS” Companies
The Global Marketplace (Leverage)
Globalization “AFFORDS” Leverage
Choose the work they want to do
Where they want to do it
Drive the greatest profit
Outsourcing & Employment
FACTUS & EU have witnessed high rates of un-employmentOutsourcing has caused job transfers to locations overseas
Location is insignificant in the maturing Outsourcing ModelAdvances in communicationsImproved computational technologiesAvailability of large pools of capable workers in the world
Outsourcing & Employment
Biggest Players:India, China, Ireland, Israel, Former Soviet Block.
New Players :Pakistan, Brazil, Chile and Ghana are some of those that are becoming players in the market.
Reverse off-shoring
Outsourcing Today
FACTInitially simple APP-DEV & MAINT. were given to emerging economies
Drive down IT CostImprove Efficiencies within IT
EMERGENCENow, outsourcing has matured and enables Companies to :
• Enhance their Competitiveness• Drive Transformational Change (handle more critical business functions
and processes)
More and more jobs such as financial industry equity research, actuarial analysis and data modeling are moving to India with very encouraging results. Additionally medical research and engineering services in industries like aerospace and civil aviation are going to India.
Mature Vendors now have operations in many new markets (S America, E Europe, China)
Outsourcing is here to stay. It helps companies remain focused on their core business and leaves the back-room, non-core business to the experts without losing control.
“Don’t just stretch the dollar, but create new dollars by unlocking value and revenue”
Conclusion