Web-Based and Traditional Outsourcing

Vivek Sharma, Varun Sharma, K.S. Rajasekaran

• Publisher: Auerbach Publications
• Year: 2016
• Print ISBN: 9780367381875
• eBook ISBN: 9781466551435
• Topic: Business
• Subtopic: Business General
• Index: Business

In today's increasingly competitive business environment, organizations must be able to adapt to the ever-changing business landscape where traditional business concepts no longer ensure success. The future will be driven by value and competing ideas-creating an environment where old alignments and equations will be replaced by a global network of

Preface

Outsourcing and Wealth Creation

Competition and wealth creation have assumed new dimensions with the outsourcing phenomenon. Process reengineering and innovation have been at the core of business process outsourcing. The concept may seem new, about two decades old, but actually it is one of the oldest in mankind’s history. Major breakthroughs have occurred in the field, starting right from the outsourcing decision and strategy making, up to implementation and business evolution. Speed of execution and increased focus, along with quality enhancement and revenue augmentation, are some of its hallmarks. Managers feeling the heat of global economic uncertainty relentlessly try to figure out optimal management strategies, models, and tactics leading to higher levels of success.

This book elucidates various outsourcing aspects and tackles nagging questions:

• Should outsourcing be considered at all or not? If so, what functions are potential candidates?
• What factors contribute to outsourcing success, and why do some companies flounder?
• What do successful companies that solve customer problems do differently?
• How can the Web be tapped to open a whole new world of outsourcing online?
• During economic slowdown, what outsourcing business strategies need to be applied?

The current business culture demands focus on delivery under pressure within stringent timelines and with limited resource, in a fast-changing world with so many optional choices available to customers. There is a continuous emphasis to do more with less.

Offering counsel on whether or not a function should be in house or contracted/outsourced and further how it should be properly evaluated is considered a complex and debatable topic, and often there seem to be too many variables that favor one over the other. This book provides deep insight into such aspects of the outsourcing industry, which is under great flux. Lowering costs, enhancing quality, and development of life cycle have been at the core of the information technology- information technology enabled service (IT—ITES) space. Outsourcing is now considered a strategic tool in the arsenal with businesses reaping its benefits in a fiercely competitive global business environment.

Outsourcing is here to stay, and companies cannot afford to ignore it, for it touches umpteen aspects of everyday life. Costly infrastructures could be associated with outsourced functions, and that cannot be reasonably underwritten by most organizations. Basic rules of thumb with exceptions exist when deciding between an insourced and an outsourced model. Business approaches need to undergo suitable necessary and sometimes radical changes in an economic climate.

Before one outsources, it is important to answer some questions:

• What is the strategic gain?
• To maximize quality, and cost advantage, which functions should be outsourced, and how does one effectively exchange knowledge?
• What risks need to be tackled when shifting business operations offshore, and what change management issues need to be addressed?
• To evaluate and choose offshore vendors, what evaluation criteria should clients use, what talents and skills will the employees need, what primary location selection criteria are needed, and what is the best location for your infrastructure needs?

This book is concerned with various outsourcing facets and provides current exhaustive business-relevant material about the industry. Managing outsourced projects involves continuous people—technology dynamics along with cross-cultural and geographic challenges. The authors have elucidated in the book that the greatest business enablers are the concept, people, and technology. Emerging trends and practices in the outsourcing industry have been dealt with, including practical ideas to facilitate success in outsourcing initiatives.

Structure and Content of This Book

Outsourcing has become a mainstream business with a bright future, although during recessionary periods the line between opportunity and risk is often blurred. There is greater emphasis on faster turnaround as outsourcing pushes the world beyond information economy toward knowledge economy. Quick sharing of knowledge through technology aids in value enhancement and cost reduction. Emergence of more geographical outsourcing destinations globally and service provider performance benchmarking tools have enhanced outsourcing attractiveness.

Clients can streamline business operations and incorporate greater flexibility by accessing professional, experienced, and high-quality service. Less capital expenditure, greater focus on core competencies, and fewer management hiccups are some outsourcing benefits along with increased control, saving on investing in latest technology, and sharing of business risks. Firms are spared the nightmare of hiring and retaining employees regularly, installing and upgrading equipment, and finding solutions to inherent process-related problems.

The initial chapters of the book provide an overview dealing with the factors favoring outsourcing, basic rudiments, if an organization should consider outsourcing at all or not, the nature and types of projects, processes, and functions that are potential candidates for outsourcing, best practices, various categories of vendors, and optimal operations execution which have greatly boosted this megatrend.

The Internet with its tremendous opportunities and potential for leveraging outsourcing online is introduced. Supported by many examples and criteria for success, this subject has been largely untouched in the past. Additionally mostly unexplored, innovative business models and concepts which allow entrepreneurs to make significant gains are put forth. These new ideas can mostly be deployed with relatively small investments. E-commerce to transport content and electronic payment systems are also discussed.

Chapters on outsourcing during recession and economic slowdown discuss strategies, approaches to be used during times of slashed IT budgets, dwindling orders, contract renegotiations, layoffs, depression, and fatigue; how organizations reposition to sustain business value; examples from outsourcing organizations that successfully managed slowdown; and entrepreneurial advice from leading business figures on mitigation methods.

The final chapters provide insight into intellectual property rights, data security, and the future of outsourcing. The future will be driven by value and competing ideas, and not so much on competing organizational sizes. The future outsourcing trends shall provide valuable insights to organizations, leaders, readers, and others.

I General Outsourcing

Chapter 1 Outsourcing Rudiments

Old ways give way to the new.

Brief Background

As barriers crumbled in the passage of time.

Contracting is one of the oldest and most common practices of work. Even in ancient times, trade existed between countries, providing access to goods and services not available in the home countries. In the early years, when the word outsourcing actually came about, people would vend things to a third party. This is contracting in its basic form. Thus there would be value addition, with the consumers getting products and services they needed, and the suppliers getting money or some acceptable mode of exchange in return.

As a concept it is prevalent in all aspects of our lives—domestic and professional. Some visible examples are “security services,” “housekeeping,” “pantry,” “laundry service,” and “car driver.” In domestic lives, household chores are done by “domestic aids.” Thus persons or institutions, not household members, execute activities requested by the household for a fee. Some may not be so visible, but are nonetheless important.

In the business context, outsourcing is all-pervasive. In the outsourcing world people learn about products differently (e.g., a virtual marketplace through electronic publishing and various other customer interface channels), buy them differently using electronic cash and secure payments systems, and have them delivered differently. There may also be a difference in how they allocate their loyalty. In this business jungle, the outsourcing organization has to adapt rapidly to a world where the traditional concepts no longer hold, where “quality” has a new meaning, where “content” is not equated to product, and where “distribution” does not necessarily mean physical transportation. Brand equity can rapidly evaporate in this new environment, forcing firms to develop new ways of doing business and leveraging from the same.

Suitable business strategy and design drivers evolve through the ability to make quick changes based on the nature and magnitude of the outsourcing business. The ability and flexibility to quickly change and reposition is needed to survive in the world of outsourcing. Supporting automation, infrastructure, resources, etc., are basic logistics needed for this.

Competition is no longer between outsourcing companies but between ideas, concepts, products, services, speed and ease of transaction initiation, execution, delivery, and closure.

Outsourcing organizations and vendors in order to remain business leaders will not just add value, they will invent and furthermore create value. The world as it exists today is replete with many examples of organizations, ideas, and products which have successfully created need and value through innovation. In the world of business outsourcing versus other traditional business industries, business setup is much quicker.

An advisable strategy is quick setup and execution, evaluating results, and rapidly making suitable changes (big or small) or exiting altogether. The cycle is quickly repeated for other ideas and products till desirable results are achieved. Thus not too much time and effort should be invested in very long-term strategy planning.

Should the outsourcing organization maintain strategic status quo and seek manageable challenges by tweaking the existing product set, or radically change the strategy to possibly induce a state of chaos, risk, and uncertainty? While such models may not be needed in a stable environment, they are relevant in the current age of volatility, especially in the very fast-changing world of the Web. This was aptly referred to as a force of “creative destruction” by Joseph Schumpeter (http://en.wikipedia.org/wiki/Joseph_Schumpeter), a professor of economics at Harvard. By destruction he meant doing away with the inertia and replacing old ways with new ones. Inability to throw away a time-tested, used, and currently successful business strategy may lead to failure over a long term. Thus organizations may need to improve on, change, and even do away with older strategies, approaches, and resources over time. This foresight to cannibalize has inherent risks and needs suitable lead times for executing and reaping benefits from introducing change. A common concern with manufacturing organizations may be that selling directly to customers may destroy the existing balance between mechanisms, structures, distribution, relationships, etc. For Internet-based businesses, the Web automatically induces deployment of the end-to-end business or transaction cycle, in its respective context, thus the need to have a focus toward innovation and research and development, whatever be the nature of the outsourcing business.

The Goals of the Game

Adding value up and down the life cycle chain.

Businesses have some basic goals, despite changes taking place: stay competitive, improve productivity through innovation, deliver quality, minimize transaction time. For firms plotting their course in the turbulent waters of outsourcing, these goals are the guiding buoys.

Altogether different management strategies are required in collaborative or committed relationships in an interconnected world. They call for relationships based on data access across the end-to-end process life cycle by all interacting players, employing openness and mutual collaboration instead of an adversarial relationship in the outsourcing business. The same is true for organizations in this highly competitive business world of outsourcing. Relationship forms another component of the strategy. A great relationship between the buyer and the vendor can be immensely helpful. The compatibility and coordination of the vendor can prove to be very useful.

Leveraging outsourcing to rewrit...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication page
• Table of Contents
• Foreword
• Preface
• Appendix: Enabling Infrastructure and Components
• Bibliography
• Index
• Author Biographies