outsourcing
TRANSCRIPT
Group 1:
Outsourcing: From cost cutting to innovation
Baleegh Khan
Lenka Stoklaskova
Ratiel Gapa
Sara Chahine
Introduction
•Outsourcing cost cutting, cost restructuring, transfer the risks of
a defined process to a third party
•Smartsourcing innovation, balance risk and opportunities, focus on
its core activities
•Challenges and future trends flexibility, overall control, cultural diversity
What is Outsourcing?
• A practice used by different companies to reduce costs by
transferring portions of work to outside suppliers rather
than completing it internally.
• The contracting or subcontracting of noncore activities in
which a company holds competitive advantage.
Outsourced Business Segments
• Information Technology
• Human Resources
• Facilities and real estate management
• Accounting
Types of Outsourcing
• 1- Business Process Outsourcing (BPO):
Contracting of the operations of a specific
business process to a third party. It is typically
categorized into back office outsourcing and front
office outsourcing.
Types of Outsourcing
• 2- Knowledge process outsourcing (KPO):
The allocation of high-level tasks to an outside
organization.
Advantages of Outsourcing
• Cost Reductions
• Access to a team of professionals
• Focus on core activities
• Develop Internal Staff
• Better Systems
• Distribution of Risk
Disadvantages of Outsourcing
• Loss of Managerial Control
• Threat to security and confidentiality
• Delays
What is Smartsourcing?
• Smartsourcing, simply put means outsourcing intelligently.
• Outsourcing is only one part
• Bridging the gap between high performance core competencies and poor performance non-core activities.
• Let you see the spectrum of your organization capabilities
• determine how to best achieve the highest level of performance, cost and innovation
• Intimate relationship between the organization and its service partner
Difference between Outsourcing and Smartsourcing
OUTSOURCING SMARTSOURCING
CUT COSTS CUT COSTS + INCREASE INNOVATION
STREAMLINE OPERATIONS STREAMLINE THE VALUE CHAIN
PARTNER ON WHAT YOU KNOW PARTNER TO DEFINE WHAT YOU DON’T KNOW
TACTICAL IMPROVEMENT STRATEGIC EXCELLENCE
DISCONTINUOUS CONTINUOUS
ARMS LENGTH PARTNERSHIP TRUST-BASED PARTNERSHIP
How can Smartsourcing create innovation?
• Key Principles:
• Flexibility (short term relationship, change of scope)
• Preparation (measurement framework with real data)
• Choice (multisourcing, reduce provider lock-in, greater options)
• Planning (picture of end state, change management)
• Control (retain the business value functions)
• Partnership (shared ownership, common goals)
Smartsourcing Based on
• Products and services
• Business model
• Processes
• Supply chain
• Customer care
Key Areas
Issues in outsourcing
• A multi-objective solution
• Flexibility – a trending theme
• Due diligence and effective vendor engagement
• Higher costs/slower product development
• Environmental context
Conclusion
• Careful analysis
• Effective outsourcing
• Don’t ‘Outsource your soul’
References• Brad Vaughan, Ken Buchanan, & Richard Evans Manageability Services
Practice - White Paper September 2005
• T. M. Koulopoulos: Smartsourcing: Driving innovation and growth through
outsourcing, Platinum Press, Avon, 2006
• Schwenker, S. Boetzel: Making growth work - How companies can expand
and become more efficient, Sprin- ger Berlin Heidelberg, Hamburg, 2007
• http://www.entrepreneur.com
• http://www.investopedia.com
• http://www.businessdictionary.com
• http://www.sitel.com
• http://www.outsourcing.com
• http://www.venturenavigator.co.uk
Questions?