Outsoucing Assignment Group 1

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES
(SIMS)
OUTSOURCING & IT RELATED SERVICES
ASSIGNMENT
Faculty: Submitted By: MRS. DIVYA LEEKHA

Sachin Gaikwad (37)
Sarfaraz Khan (44)
Krishna Sharma (19)
Course: EPGDM
Outsourcing and IT Related Services Page 1

Q1: Advantages and Disadvantages of IT outsourcing
Answer: Advantages of IT outsourcing:
• Outsourcing your non-core activities will give you more time to concentrate on your core business processes
• Outsourcing can give you access to professional, expert and high-quality services.
• With outsourcing your organization can experience increased efficiency and productivity in non-core business
processes.
• Outsourcing can help you streamline your business operations.
• Offshore outsourcing can help you save on time, effort, manpower, operating costs and training costs amongst others.
• Outsourcing can make your organization more flexible to change.
• You can experience an increased control of your business with outsourcing.
• Your organization can save on investing in the latest technology, software and infrastructure as your outsourcing
partner would be investing in these.
• Outsourcing can give you assurance that your business processes are being carried out efficiently, proficiently and
within a fast turnaround time.
• Off shoring can help your organization save on capital expenditures.
• By outsourcing, you can cater to the new and challenging demands of your customers.
• Outsourcing can help your organization to free up its cash flow.
• Sharing your business risks is possible with outsourcing.
• Outsourcing can give your business a competitive advantage as you will be able to increase productivity in all the areas
of your business.
• Outsourcing can help your organization to cut is operational costs to more than half.
Disadvantages of IT outsourcing:
• At times, it is more cost-effective to conduct a particular business process, rather than outsourcing it.
• While outsourcing services such as payroll processing services and tax preparation services, your outsourcing provider
will be able to see your company’s confidential information and hence there is a threat to security and confidentiality
in outsourcing.
• When you begin to outsource your business processes, you might find it difficult to manage the offshore provider
when compared to managing processes within your organization.
• Off shoring can create potential redundancies for your organization.

• In case, your offshore service provider becomes bankrupt or goes out of business, your organization will have to
immediately move your business processes in-house or find another outsourcing provider.
• The employees in your organization might not like the idea of you outsourcing your processes and they might express
lack of interest or lack of quality at work.
• Your outsourcing provider might not be only providing services for your organization. Since your provider might be
catering to the needs of several companies, there might be not be complete devotion to you and your company.
• By outsourcing, you might forget to cater to the needs of your valuable customers as your focus will be on the
business process that is outsourced.
• In outsourcing, you may lose your control over the process that is outsourced
• Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred while signing a contract
between companies. You might also have to spend a lot of time and effort in getting the contract signed.
• With outsourcing, your organization might suffer from a lack of customer focus.
• There can be several disadvantages in outsourcing, such as, renewing contracts, misunderstanding of the contract,
lack of communication, poor quality and delayed services amongst others.
Q2: Why India has been Chosen for the IT &ITES Enable Services Outsourcing
Answer:
There are Various Opportunities available for IT &ITES Enable Services Outsourcing to India
An opportunity opens for India in the fields of:
-IT Operation (Technology Services)
• Application Development and Maintenance
• E-commerce, ERP implementation & support etc..
-BPO, KPO, etc operations
•Voice IT Support, Bill Collections, Call Centers and Telemarketing, Tele-servicing, product support, Travel and Hospitality
services etc..
Main Reasons for Outsourcing to India are follows:
 ANS: Availability of qualified resources
 English Speaking Available Resources
 knowledge skills – Technical & Business skills
 Cost and quality
 Highest English speakers among other developing countries
 Better tax structures - SEZ
 Enthusiastic and young population
Q3) SWOT Analysis - Outsourcing to India

Answer :
SWOT Analysis - Outsourcing to India
SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) is also known as TOWS analysis. SWOT Analysis is a powerful
technique to throw light on your business possibilities. SWOT Analysis helps you chisel out your strategies in a more streamlined
manner and create a niche in the market.
 Strengths
- Highly skilled, English-speaking workforce
- Abundant & Cheaper manpower
- Lower attrition rates than in the West
- Round-the-clock advantage for Western companies due to the huge time difference
- Lower response time with efficient and effective service
Look at your strengths in the context of the competition. If you are comparing your product with a competitor who has a large
share of the market, your own large share of the market is not a strength but a necessity.
 Weaknesses
- Recent months have seen a rise in the level of attrition rates
among outsourcing
- The cost of telecom and network infrastructure is much higher
- Local infrastructure
- Political influence
You might need to get into your customers' or competitors' shoes to check if there are weaknesses that they perceive but you
overlooked. It is more an internal versus an external view.
 Opportunities
- To work closely with associations like Nasscom to portray India as the most favoured IT destination
in the world
- India can be branded as a quality outsourcing destination
- $69 billion ITES business by 2010
- $97.5 billion IT (consulting, software solutions) market by 2010
You can discover new opportunities by analyzing your strengths. You could also look at your weaknesses and think about the
potential opportunities opening up if you eliminate your weaknesses.
 Threats

- The anti-outsourcing legislation in the US states
- Workers in British Telecom have protested against outsourcing of
Work to Indian companies
- Other IT destinations such as China, Philippines, Vietnam and South Africa could have an edge on
the cost factor
Strengths and Weaknesses are internal and Opportunities and Threats relate to external factors.
4) Future Trends of IT Outsourcing
Answer
India's share of the global offshore outsourcing market for software and back-office services is 44%. According to the National
Association of Software Companies (Nasscom), India’s premier trade body of the IT software and services industry, technology
and IT services exports in India were worth $17.2bn (£9.5bn) in the year ended March 2005, a rise of 34.5% over the previous
year. A further expansion of 30% in exports is predicted in the next twelve months, to reach $22.5bn. The US accounts for 68%
of Indian exports.
Current outsourcing trends worldwide

1. Outsourcing in traditional areas like customer care, financial services, manufacturing, IT, ITES is growing.
2. Large multinational companies are investing in captive BPO units in supplier countries in multiple locations, to reduce risk
and control quality.
3. Outsourcing is becoming more sophisticated. Customers are looking for business process excellence, speed to market,
improvement in quality, benchmarking to world-class standards. CEOs are involved to ensure the long-term success of
strategic offshoring decisions. On their part, suppliers understand that they must compete globally and that outsourcing
will play a more transformational and strategic role for the client.
4. There is increasing global competition and pressure on margins from emerging lower-cost outsourcing destinations.
5. Risk factors for outsourcing like terrorism and war, disaster and disease make contingency plans a necessity.
6. The IT industry will see roughly 10 to 15% of its jobs move overseas during the next ten years, inviting more political debate.
7. For the past two decades, China has been growing at an astounding 9.5% a year and India by 6%. They are impacting the
global economy and leading the outsourcing revolution.
Future outsourcing trends worldwide

1. Outsourcing expenditure will continue to rise.
2. More countries will find outsourcing attractive, creating a multi-polar world. Following the lead of the US and UK, the
European Union markets will expand their offshoring programs, while Japan will increasingly look to China for its needs.
3. Customers will take greater control in driving and designing deals.
4. The interlinking of the supply chains brought about because of outsourcing will create stability as companies will put
pressure on governments to avoid wars.
5. Risk factors and unexpected occurrences like war, terrorism, disease, natural disasters and economic upheavals can throw a
wrench in the works.

6. The rising price of oil will put increasing pressure on companies to both utilize technology and outsource to remain
profitable.
7. The rising price of oil will cause oil consuming countries like the USA to be less competitive resulting in more outsourcing to
India and China.
8. India will show excellence in Services that require advanced English like Research and Analysis Outsourcing, Content and
Medicine.
9. Political backlash over outsourcing is likely to lessen over time as economies strengthen and companies continue to reap
the benefits of offshoring.
10. Technological power will shift from the West to the East as India and China emerge as big players in the global outsourcing
market. The two countries have the size and weight to transform the 21st global economy.
11. By 2015 China will be No. 1, India No: 2 in the global top five outsourcing destinations.
12. Vendor focus will shift from basic skills, costs and processes to domain knowledge, transition challenges, change
management, HR issues and governance.
13. Regional outsourcing hubs will develop as companies will take strategic near-shoring initiatives to minimize risk and
leverage cultural and linguistic compatibility. The supplier countries are in the same time zone as their customers.
14. The large diverse Indian companies will face stiff competition from new focused smaller companies. Because these
companies are able to focus and become excellent in one are they will be able to provide a higher level of service.
Opportunities for India
Near-shoring as a business strategy

India can collaborate with other countries to leverage local knowledge of the business environment and language skills while
providing its domain knowledge and technological expertise for successful outsourcing. For example, TCS has a Latin American
arm based in Mumbai, India which serves an insurance client in Chile with a center in Uruguay as a near-shore location.
Outsource2india has a collaboration with a company in NE India that leverages the unique talents of the people of this region.
Opportunity areas
Today more industries are where IT was in the 1990’s - knowledge based. Research and Analysis Outsourcing may soon be the
biggest revenue grosser in India as BPO companies move up the value chain in their service offerings. This includes:
1. Research and Development
o Product Innovation - Companies are going beyond basic research to invest in innovation and new product development.
Companies that have invested in R&D in India are Cisco Systems, Motorola, Hewlett-Packard, Google General Motors
Corp. and Boeing Co among others.
o Co-development- In pharmaceuticals, India has the opportunity of co-development and ownership of new
patented drugs through drug research, clinical trials and manufacturing. Indian pharma major Ranbaxy has an
agreement with MNCGlaxoSmithKline to commercialize compounds they develop together.
2. Legal Outsourcing
India ’s large pool of qualified English-speaking lawyers with experience in the British legal system can offer paralegal
support, legal support and patent services. A few Indian companies affiliated with American law firms are now able capture a
tiny piece of the American market. They are now doing legal research at very high rates by Indian standards but yet 50%
below typical American rates.
3. Engineering Outsourcing
India can provide high-quality engineering services in the fields of:

o Mechanical & Electronic engineering - analysis and design , embedded software
o Plant Design, Process Engineering
o Plant Automation Services
o Enterprise Asset Management and OEM solutions
4. Remote Infrastructure Management Services
India can offer management services for IT infrastructure, applications operations, IT security and maintenance. This sector
presents great potential through large-value multi-year contracts
5. Accounting Services
We are in the initial stage where payroll processing services and some accounting is being done for large American
companies. This trend will continue and soon a full range of accounting and tax services will be provided by Indian
companies.
6 Outsourcing opportunities for India exist in other fields like Financial Research, content development, medical writing:
animation, film, publishing, web services; Human Resource outsourcing: recruitment, training, Education, Nanotechnology and
many others.
Challenges for India
Rising competition
 In the next ten years, China will replace India in its number 1 position in the global ITES-BPO industry.
 Rising costs and low efficiency in many cities like Bangalore will make software outsourcing less attractive in future. The giants
may show a drop in earnings.
 India ’s terrible Infrastructure will continue to be a drag on the potential of India giving other countries the competitive
advantage.
 Other competing countries providing low-cost outsourcing options will exert a downward push on costs – East Europe, Latin
America, South Africa
Infrastructure
 India ’s ability to develop infrastructure is far outpaced by neighboring China
 Metro cities are getting saturated and costs are rising -- Tier II towns need to develop infrastructure but India’s track record
does not bode well for fast development.
Human resources and training

 The demand-supply gap in India for knowledge workers is being felt now in Bangalore but may peak India wide in 2008-2009
 The education system needs transformation to produce people with skill sets that match industry needs.
 The transition to knowledge processing will be a much bigger challenge for the Indian company and employee than it was for
BPO services. The typical college graduate many not have background or flexibility to understand global issues required by
this type of service.

Q1. What are low skilled and high skilled labour jobs in LPO?
Legal Process Outsourcing (LPO) is a field in outsourcing that involves high value added services. Practice of a law firm obtaining
legal support services from a third party service provider is referred as Legal outsourcing. If the outsourced unit is based in
another country then, the practice is known as off shoring.
At initial stage legal outsourcing involved only low-end works, for eg: transcription. Later this was expanded to specialized task
such as legal research, library services, pre-litigation document creation, consultation, application drafting, analysis, and so on.
Now LPO has grown as a mainstream profession for offshore lawyers, attorneys and law firms.
Legal outsourcing can be classified into two processes. They are low skilled quantitative tasks or high end qualitative tasks.
Low skilled quantitative tasks include the following:
 Paralegal services and legal coding

 Corporate secretarial services
 Legal memo development
 Transcription
 Document management
 Litigation support
 Data entry
High skilled qualitative tasks include the following:
 Intellectual property rights (IPR)

 Patent search and application drafting
 Trademark and copyright registration
 Legal research
 Document review and analysis and intelligence services
2. What are the Challenges faced by LPO industry?
Legal Process Outsourcing (often abbreviated as LPO), is a section of the outsourcing industry that is gaining popularity quite
fast.
In Legal Process Outsourcing, the legal documentations required by an outsourcer, such as preparation of deeds, business
agreements, business transaction details, etc., are handled by an independent outsourcing service provider located in a different
country. This type of outsourcing is mostly put to use by US and European companies, in order to cut down on the attorney
costs.
As much as the industry may seem to be highly profitable, it is not without its drawbacks. It can never be ignored that the LPO
industry is still in its early years, and the possible complications that can occur, keeps prospective clients away from this
otherwise profitable practice. Besides, many outsourcers are in two minds about how much cost the practice could actually cut
down in reality, and are still hesitant about adopting the practice.

There are other complications faced by the industry as well, such as:
1. Conflicts of client’s interest(s) – This can occur when the law firm providing outsourcing service to a client takes up a project,
either intentionally or unintentionally, which is opposed to the interest of the client. There are certain ethics that law firms have
to be careful never to breach. For instance, a law firm representing one client in a case must make sure that another branch of
the same firm is not representing the opposing party. A law firm carrying out such practices, even inadvertently, will suffer a
major blow to its reputation, and will probably also face a lawsuit from the jilted client.
2. Confidentiality issues – When one organization is shipping its legal work off to a law firm located in a faraway country, it is
risking a breach of confidentiality. The law firm handling the operations must have strict guidelines in place and provide proper
training to employees to ensure that they understand the requirements of the client. The firm must also have a stringent
background screening procedure in place, to ensure that only honest and dependable employees are hired.
3. Using properly tested legal software – When the legal work is being carried out by using special software packages, the
software needs to be checked properly for quality issues. There should be a searchable database that is constantly updated with
categorized details about the client operations handled by the law firm, including the billing information. LPO services can be
quite expensive compared to other fields of outsourcing. Clients do not take it kindly if they find out that they have been
overcharged.
Some of the other challenges of LPO are:
4. Initial cost of training the respective Indian lawyers to maintain quality
5.Regulatory Scrutiny under varying privacy laws
6. High attrition rate
7. Complete quality assurance from firms is difficult to get.
Ques: What are different types of outsourcing? Explain KPO?
Ans:
Outsourcing is the process by which an organization contracts with another individual or company to get some of its work done.
Viewed this way, most organizations go for some kind or other of outsourcing. Generally it is non-core aspects of the business
that are outsourced.
The firms that offer the services thus required are called service providers or third-party providers. Businesses may thus tie up
with service providers for either individual processes or whole projects or operations.
Outsourcing can be divided into two broad categories. They are BPO and KPO.
 BPO: Business Process Outsourcing
 KPO: Knowledge Process Outsourcing
 LPO: Legal Process Outsourcing
 RPO: Research Process Outsourcing

 HRO: Human Resource Outsourcing
 MBPO: Medical Business Process Outsourcing
 Procurement BPO

Knowledge process outsourcing (KPO) is a form of outsourcing, in which knowledge-related and information-related work is
carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or
in an offshore location to save cost. Unlike the outsourcing of manufacturing, this typically involves high-value work carried out
by highly skilled staff. KPO firms, in addition to providing expertise in the processes themselves, often make many low level
business decisions—typically those that are easily undone if they conflict with higher-level business plans
It is being claimed that KPO is one step extension of Business Processing Outsourcing (BPO) because BPO Industry is shaping
into Knowledge Process Outsourcing because of its favorable advantageous and future scope. But, let us not treat it only a 'B'
replaced by a 'K'. In fact, Knowledge process can be defined as high added value processes chain where the achievement of
objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. And when
this activity gets outsourced a new business activity emerges, which is generally known as Knowledge Process Outsourcing.
Knowledge Processing Outsourcing (popularly known as a KPO), calls for the application of specialized domain pertinent
knowledge of a high level. The KPO typically involves a component of Business Processing Outsourcing (BPO), Research Process
Outsourcing (RPO) and Analysis Proves Outsourcing (APO). KPO business entities provide typical domain-based processes,
advanced analytical skills and business expertise, rather than just process expertise. KPO Industry is handling more amount of
high skilled work other than the BPO Industry. While KPO derives its strength from the depth of knowledge, experience and
judgment factor; BPO in contrast is more about size, volume and efficiency.
In fact, it is the evolution and maturity of the Indian BPO sector that has given rise to yet another wave in the global outsourcing
scenario: KPO or Knowledge Process Outsourcing. The success achieved by many overseas companies in outsourcing business
process operations to India has encouraged many of the said companies to start outsourcing their high-end knowledge work as
well. Cost savings, operational efficiencies, availability of and access to a highly skilled and talented workforce and improved
quality are all underlying expectations in outsourcing high-end processes to India
The future of KPO has a high potential as it is not restricted to only Information Technology (IT) or Information Technology
Enabled Services (ITES) sectors and includes other sectors like Legal Processes, Intellectual Property and Patent related services,
Engineering Services, Web Development application, CAD/CAM Applications, Business Research and Analytics, Legal Research,
Clinical Research, Publishing, Market Research (Market research KPO) etc.
In today's competitive environment, focus is to concentrate on core specialization and core-competency areas and outsource
the rest of the activities. Many companies and organizations have come to realize that by outsourcing non-core activities, not
only cost are minimized and efficiencies improved but the total business improves because the focus shifts to the key growth
areas of the business activity.
KPO services include the following:
 Investment research services (equity, fixed income and credit, and quantitative research)
 Business research services
 Data Analytics
 Market research services
 Valuation and fairness opinions
 Legal process outsourcing
 Patent research services
 Business operations support, analytics & management
 Editorial process outsourcing
Outsourcing and IT Related Services Page

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Scope and Future of KPO
According to a report of National Association of Software and Services Companies (NASSCOM), the Indian chamber of
commerce that serves as an interface to the Indian Software industry, Knowledge Process Outsourcing industry (KPO) is
expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India. Another report predicts that
India will capture more than 70 percent of the KPO sector by 2010. Apart from India, countries such as Russia, China, the Czech
Republic, Ireland, and Israel are also expected to join the KPO industry.
According to a recent study by “Evalueserve, a Gurgaon based outsourcing company having service chart for global world”, the
global KPO market is expected to grow at a cumulative annual growth rate (CAGR) of 46 per cent, from $1.2 billion in 2003 to
$17 billion in 2010. Compare this with the prediction for the low-end outsourcing services market. This is expected to have a
CAGR of 26 per cent, from $ 7.7 billion to $39.8 billion in the same period.
Evalueserve says India provided $3.5 billion of BPO and KPO (but non-IT) services in 2003 and is expected to grow at a CAGR of
36 per cent during 2004 to 2010. Hence, it is likely to earn $30 billion in 2010 by providing these services.
In the future, it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or
Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services,
Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO), etc.
Bottlenecks in Future Growth

A study on Knowledge Process Outsourcing (KPO) sector shows a huge supply gap that threatens to cripple its growth. Research,
a UK-based research services company, has gathered evidence suggesting that the KPO market may just about reach a size of $5
billion by 2010, manned by 100,000 people instead of projections of a $12 billion market supported by 250,000 employees.
This accentuates Nasscom's projections of a shortfall of 500,000 workers in ITES and BPO sectors by 2010.
Ques: Differentiate between BPO and RPO.
Ans:
RPO
Searching for the right information is an activity that can be easily outsourced - the first step in research process outsourcing or
RPO. Business information requires careful study and sifting before value-added analysis can be done. But the deluge of
information available today requires an inordinate amount of time to wade through before business executives can derive value
from it. RPO enhances productivity in your workplace, enabling you to handle more business. For example, a market researcher
can quickly gather competitive intelligence about a product or service, a legal consultant can process more patents, an
investment analyst can process more stocks, a pharma company can conduct contract research outsourcing, enabling faster
time-to-market for new drugs . the list goes on. India has become a preferred R&D destination with its pool of knowledge
workers with specialized skills.
BPO
BPO as expanded sounds as Business Process Outsourcing and can be aptly defined as the act of utilizing the services of a third
party by a company in order to perform its back office operations that might be payroll administration, customer help desks/ call
centers, telemarketing, accounting, billing; the list is endless.
Parameters BPO RPO
Domain BPO is like a commodity business that RPO occupies the higher end of the BPO

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focuses more on information technology spectrum, making it a subset of BPO.
and its various sectors.
Scope Business Process Outsourcing wave has Research outsourcing is the natural
made it navigable for new avenues and progression of BPO.
paved the way for better scope to
outsource high-tech knowledge based
jobs.
Benefits An advantage of BPO is the way in which Research is to maintain higher quality
it helps to increase a company’s standards, requirement of higher level of
flexibility. control, and the lack of talent pool,
investment in infrastructure, enhanced
risk management and confidentiality.
Sectors Involved BPO is typically categorized into back It delves into challenging sectors like
office outsourcing - which includes clinical research, business research and
internal business functions such as intellectual property research. India has
human resources or finance and been rated the most preferred Research
accounting, and front office outsourcing and Analysis destination owing to the
- which includes customer-related country's quality IT training, friendly
services such as contact center services. government policies, large talent pool
and low labor costs.
Q1. What are the basic services offered by LPO?
Ans: There are five basic services offered by LPO:
1) Paralegal Services :
Paralegal services are legal assistants who spend most of their time helping to manage the massive paperwork
generated by legal proceedings. Paralegals file, sort, index, photocopy, and draft legal documents. They may also
hold hearings and interview witnesses.
First you should know that a paralegal cannot give you any legal advice. For that you'll need an attorney. But if
you're looking to find someone to start or complete legal forms or do legal research and much more, then your
most cost effective alternative would be to hire a paralegal.
Paralegal services offered by LPO’s are:
A) Objective document coding
B) Immigration visa processing
C) Intellectual property services
D) Legal transcription
E) Contract database management
2) Legal support services :

In these kinds of services the first and second level of document reviews are handled, legal research work and
document drafting are also handled. The comprehensive and customized legal support services to both law firms
and corporate legal departments across geographies and jurisdictions. These company’s services are classified
into the following distinct categories.
The teams can work directly with the clients’ external or in-house counsels. In many cases, our professionals
work onsite with the client’s legal and paralegal departments on time-critical projects.

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3) Legal staffing solution :
Legal Staffing Solutions focuses on the recruitment and placement of legal personnel for permanent positions
.These are scalable legal staffing solution domestic or offshore they handle attorney paralegal and secretarial
work. They provide highest quality service to our client-companies and client-candidates. Legal Staffing
Solutions, they maintain an up to date list of current openings at local law firms, investment bank and
companies. At Legal Staffing Solutions, partner s with recruiters in other cities to more effectively assist
candidates when they are seeking employment outside. Legal Staffing Solutions compiles information on salary
and benefits available in connection with certain employment opportunities.
4) Exclusive global facility :

They build exclusive facility for global expansion .Transfer management for a seamless transition .They operate
and manage facility using best practices.
For example: they provide exclusive experience developing call centers on behalf of the clients deciding location,
labor and cost.
Labor is the number one determining factor. The cost, size and education level of the labor pool are all significant
determining factors in narrowing your search criteria. Global Facilities Development works hand in hand with
workforce development agencies to provide the best location site sciences taking into account variables in facility
cost, labor cost, taxes and the quality of the labor pool to help narrow your site selection and occupancy lead
time. They insure that the facility is compatible for the needs of their clients and, through unique tax based
incentive program, help to minimize capital expenditures on behalf of our clients.
5) e-Discovery solutions:
e-Discovery solutions Mange comprehensive discovery and Governance, Risk and Compliance (GRC) consulting
services and technology worldwide, nationwide scan productions, computer forensic work, data document
hosting and work like EDD processing.
With analysts predicting a multi-billion market for in-house eDiscovery and GRC Cloud based solutions, they focus
on developing, marketing, selling and supporting a comprehensive, best-in-class cloud based eDiscovery and GRC
solution for the legal and Information Technology departments of the Global 2000.
6) Para legal services :

Paralegal is a term that is used in most jurisdictions to describe a paraprofessional who assists qualified lawyers
in their legal work. Paralegals are not the same in every country. In the United States, they are not authorized by
the government or other agency to offer legal services in the same way, nor are they officers of the court, nor are
they usually subject to government-/court-sanctioned rules of conduct. In Ontario, Canada, paralegals are
licensed and regulated the same way that lawyers are. A paralegal license allows for the paralegal to provide
permitted legal services to the public and appear before certain lower level courts and administrative tribunals.
In paralegal services following works are handled:

a) Immigration visa processing
b) Intellectual property services
c) Legal transcription
d) Contract and database management
Q2. Explain the four basic models of LPO firms.
Ans: The four basic models of Lpo’s are:
1) Captive center:
An operation that is owned by an offshore company. The activities are performed offshore but are not outsourced to a
third party is known as captive center.
Captive center means Subsidiary Company, which operate separately however comes under the governance of the
parent company.

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Captive centers allow businesses to significantly cut costs and increase capitalization while retaining full operational
control, ensuring long-term value creation and minimizing intellectual property and data security risks. Captive model
means that customer organization makes strategic decision to create its presence in offshore/near shore location and
conduct work there as a part of its own operations. Activities are performed remotely, but they are not outsourced to
the vendor. Thus the customer is able to retain full control and mitigate respective risks associated with intellectual
property and other sensitive business information.
2) Basic law firms :

These are law firm which are formed by one or more lawyers to engage in the practice of law.
Law Firm Business refers to the management of the law firm as a business operation - not just as a service operation.
Examples of include:
* Effective and appropriate delegation within the firm so as to maximize the productivity of each partner, attorney and
employee in the law firm.
* Testing, tracking and geometrically expanding the marketing reach of any given firm in order to develop proven
marketing systems that can be scaled by the law firm to achieve maximum client recruitment, and therefore, revenue
generation
* Maximizing legal client value by realizing that your targeted prospect and client base can be leveraged for profit by
discovering additional needs and then fulfilling them.
3) Joint venture :
A joint venture is a business agreement in which parties agrees to develop, for a finite time, a new entity and new
assets by contributing equity. They both exercise control over the enterprise and consequently share revenues,
expenses and assets. There are other types of companies such as JV limited by guarantee, joint ventures limited by
guarantee with partners holding shares. A JV on a continuing basis is the normal business undertaking. It is similar to a
business partnership with two differences: the first, a partnership generally involves an ongoing, long-term business
relationship, whereas an equity-based JV comprises a single business activity. Second, all the partners have to agree to
dissolve the partnership whereas a finite time has to lapse before it comes to an end (or is closed by the Court due to
a dispute). JVs are normally formed both inside one's own country and between firms belonging to different countries.
JVs are usually formed in order to combine strengths or to bypass legal restrictions within a country; for example an
insurance company cannot market its policies through a banking company. Some JVs are also formed because the law
of a country allows dispute settlement, should it occur, in a third country. They are also formed to minimize business,
tax and political risks. The JV is an alternative to the parent-subsidiary business partnership in emerging countries,
discouraged, on account of (a) ignoring national objectives (b) slow-growth (c) parental control of funds and (d)
disallowing competition.
4) Third party delivery center :
A company not directly contracted to either party. Third-party access policies require owners of natural monopoly
infrastructure facilities to grant access to those facilities to parties other than their own customers. Third-party access policies
require owners of natural monopoly infrastructure facilities to grant access to those facilities to parties other than their own
customers.
Example: Datamatics in India
In the entire above models captive center is the most beneficial one because of flowing reasons:
 Full operational control and monitoring

 Minimization of intellectual property and data security risks
 Retained knowledge of industry, specific business processes, practices and techniques
 Improved communications and easy replication of processes
 Full ownership after transfer
 Increase in development center's capitalized value over time

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Furthermore, captive center can provide knowledge about local market conditions and be commercialized in the future.
Q.1Ans:- Short notes on Outsourcing In Aviation Industry.
Outsourcing in the aviation industry has come a long way from the low-end projects undertaken in the early 1990s, which
involved the basic use of computer-aided design (CAD)/computer-aided manufacturing (CAM) for the creation of drawings and
modelling from 2D to 3D. By the turn of the millennium, the industry, taking a lead from the automotive sector, started to wake
up to the fact that outsourcing projects in general, and outsourcing them to places like India in particular, held many
advantages. Not only was there a large pool of highly-trained engineers to hand in India, but the time-zone and cost advantages
were also highly attractive. In an industry that operates at low margins, any such advantage over competitors was a boon.
The increased maturity level of the IT services outsourcing industry also played a large role in bringing engineering outsourcers
up the value chain, demonstrating the capability of various consulting firms that moved into the aerospace space to work
alongside customers on ever-more complex core projects. As a result, aerospace original equipment manufacturers (OEMs) and
tier-one suppliers are these days entrusting increasingly high-end and complicated projects into the hands of outsourcers.
Correspondingly, the large IT services players have extended their offerings and core skills to enable them to bring high quality,
high value and intelligent engineering services to market.
The majority of OEMs and tier-one suppliers now outsource their work to some degree or another. IT in transport, aviation
included, involves some of the most cutting-edge technologies, an increasing proportion of which are designed, tested or
implemented by third parties. The development and introduction of radio frequency identification (RFID), for instance, could not
have taken place without outsourcing part of the research and development (R&D) to third parties. Tata Consultancy Services'
(TCS) aerospace engineers, for example, worked in partnership with Oracle in 2005 to pilot RFID with the Engineering arm of
UK’s second largest long haul airliner.
Airlines characteristically subcontract an extensive collection of production processes, aircraft safeguarding, luggage and ground
handling and in-flight food preparation etc. As in other manufacturing sectors, a number of IT and production functions such as
funding, accounting or HR services, may perhaps also be outsourced.
Outsourcing in the airlines industry is dependent on a lot of factors and the countries’ government plays a significant role here.
The outsourcing of operations can be done only after legalities permit it. The third party involvement for availing various
services for airlines operations is indeed a favorable and beneficial initiative for both the sub-contractor and the airlines. There
may be other things like airline reservation, ticketing and exit direct systems that will be provided or keep up by third party
providers to the airlines.
However, as well as cutting-edge technology, the right skills at the right cost are also needed to achieve success. The increased
value of outsourcing to the aviation industry could only have come about if the industry was prepared to trust third parties to
take on projects. And only with the right talent and the right skills can outsourcers prove that they are capable of delivering
results. To this end, outsourcers look to hire not only the best engineering graduates, but also increasingly recruit laterally from
within the industry and internationally, building up a workforce from around the globe, including the United States and United
Kingdom. In the same way that IT services outsourcing now no longer means simply shipping projects off to low-cost
destinations such as India, in the future the aerospace outsourcing industry will move toward an increasingly global delivery
model, with outsourcers providing the capability to design anywhere and build anywhere.
Q.2 Ans:- Following are the areas from Aviation which are outsourced with examples
i. Aerospace OEMs like Airbus, Boeing and Bombardier are turning to third-party outsourcing organizations to outsource
engineering services and tap into a global skills pool to find the expertise they need to improve processes and
products. Driven by history and political necessity, the 40-year-old plane-maker was forced from the outset to create a

15
system in which planes are built from large sections made in four countries - Britain, France, Germany and Spain - and
then assembled in France or Germany. Airbus has also begun assembling smaller A320 150-seat planes in China for
the local market.
ii. Most work in parts is outsourced in either aero structure in mechanical or embedded system in avionics. The part wise
capability of all the players are primarily derived from the previous and on going work experience.e;g Majority of the
work outsourced in aero structures is outsourced from Boeing, Airbus and their suppliers. While, the aero engine work
is outsourced from majors such as Rolls Royce, Pratt and Whitney and GE Aviation.
iii. Outsourcing in avionics has involved work such as embedded software testing, verification and validation and some
level of PCB design and testing being outsourced. Work such as wiring harness design is also outsourced
iv. Tactical or short term alliances are the most common relationships. OEM clients are gauging Indian capabilities with
multiple engagements of small nature but some companies are now increasing numbers with a chosen tested vendor.
Recently L&T had been tie-up eith EADS France for Defence/Aerospace Electronics.
v. Captives have been leveraging India strength of embedded systems and thus large amount of work related to
embedded software design and development and design support for embedded hardware is done from them.e,g TCS
tie-up with Sarkosky & Italian major AW.
vi. Airplane Maintenance Outsourcing is booming area now a days.The airline industry considers the airplane
maintenance outsourcing to be one of the most effective ways to cut costs, but many are concerned about the safety
of offshore maintenance facilities. It has also become popular, as less and less airlines send their planes to their own
local repair shops and instead opt for less expensive private maintenance.
vii. The increase’s dominant cause for outsourcing is expected to be the offset agreement under which supplier will have
to offset (reverse purchase) at least 30 per cent of the total purchase value by either procuring components by
partnering with local firms or by availing of engineering services, rules the offset policy.Out of the entire outsourcing
pie, vendors account for a majority of the market (around 73-78%) and are expected to grow in both, short and long
term time frame. Not many captives are currently present in India, but captives would also see an increase in number
viii. Wipro Technologies has come to an understanding with All Nippon Airways (ANA) of Japan for three years to deliver
material management system. With a fleet of 209 aircraft, ANA is the first airline in the world to procure the Boeing
787 Dreamliner. Wipro has undertaken the task of transforming its legacy material management system to support the
new fleet, in line with the expansion of its business at Tokyo’s Haneda Airport with its upcoming fourth runway in
2010.
Q.3. Ans:- Following are the problems faced by Aviation Industry for outsourcing:
i. Even with all the new concerns, many companies don't pay enough attention to the full range of logistics challenges
they face when they outsource manufacturing to suppliers in distant locations
ii. Question arises about safety of keeping aircraft in airworthiness condition Is the company to whom the work is
outsourced performs or maintain the aircraft in proper airworthy condition
iii. There is one more disadvantage that if we consider aviation industry which gives high revenue to the government,
may fall dramatically. This will create problem for the development of country and have adverse effect on GDP.
Outsourcing can be stop when oil price will rise. When we see oil prices rising the high, the company again has to
think about the outsourcing because now they have to pay more for the fuel. So now the expense which they save
from outsourcing has to be compensated in the fuel cost. Seeking the nation interest its better to kept outsourcing
away.

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iv. With the continuing demand to cut the cost and carbon emissions of air travel, aircraft manufacturing companies are
increasingly compelled to reduce development costs and improve the operating efficiency of their aircraft. To this end,
the outsourcing of engineering services is playing an ever more important role, enabling manufacturers to maintain
margins and lower costs without compromising quality
v. EU-based airlines must provide carbon dioxide emission reports. That's why, over the last six months, several EU
airlines have begun using bio-fuel either wholly or in part on certain routes. This trend is now spreading to North
America where several airlines have indicated their interest in buying eco-friendly jet fuel. In addition, several EU
airlines have begun developing carbon offset programs as well as implementing shorter routes and efficient landing
operations as well as best practices in fuel management to reduce emissions.
vi. With the dramatic increase in demand for the plane,most of the OEM outsoured their work to 1tier & 2 tier
supplier.but due to company’s supply chaim mfg,OEM have to relie on supplier which delay the delivery of aircraft &
increases the landing cost of supply chain.e,g for Boeing 787 delay on delivery.
vii. The company that outsourcers can get into serious trouble if the service provider refuses to provide business due to
bankruptcy, lack of funds, labor etc
viii. Outsourcing requires the control of the process being outsourced by transferred to the service provider. Thus the
company may loose control over its process
ix. The service provider in developing countries generally services many companies. So there are many chances of
partiality owing to more payment by other parties
x. The current employees in the company that outsourcers may feel threat due to outsourcing and may not work
properly
xi. The attitude of people in the developed countries against companies that outsource is generally bad The main threat
of outsourcing the work will directly affect the unemployment rate of that country
Outsourcing in Supply Chain Industry
Q1.What is Supply chain structure and how does Outsourcing of Supply Chain effects the following issues?
a) Inventory control b) Distribution strategies
Answer:
The upstream and downstream coordination engendered by supply chain management with the goal of minimizing
uncertainty and variations along the supply chain shows that businesses can no longer expect that the objective of
business can be met just by becoming efficient in itself. Process rationalization and measurement system would need to
be implemented to improve the operational efficiency inside a company by reducing lead times and by collaborating
with upstream and downstream players of the supply chain. The situation requires that for value to reach the customers,
efficiency must be evident even in the suppliers, the distribution channel, and all associated activities and partners.
Competition is no longer between individual businesses, but between groups of companies that are linked together in a
chain for delivering customer value.

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Supply chain is often represented as a network comprising of Supplier, manufacturer, distributers and buyers. The
nodes in the network represent facilities, which are connected by links that represent direct transportation connections
permitted by the company in managing its supply chain. The network has four levels of facilities. Product flow
downstream from suppliers or vendors to plants, plants to distribution centers, and distribution centers to markets i.e.
buyers. In general, a supply chain network may have an arbitrary number of levels. In some instances, products may flow
upstream when intermediate products are returned to plants for rework or reusable products are returned from markets
to distribution centers for recycling.
Significant to the management of supply chain is the possibility that each product in the system could have a unique set
of nodes and flow paths associated with it. For example, a single product may exhibit alternative supply chains, thus
creating opportunity for cost reduction through selection of optimal supply chains for each material. Notwithstanding the
possibility of channels of alternative, in general, the supply chain network system follows path of product movement from
vendors to plants, plants to distribution centers, and distribution centers to markets with transition from each node
recognizing the significance product service and delivery time, cost control, and inventory management.
INTEGRATED SUPPLY CHAIN AND INVENTORY MANAGEMENT
Integrated supply chain require that each segment of the supply chain i.e., procurement, production and distribution be
functionally integrated for optimum result. Today's technology is the key that allows the supply chain to become
integrated and therefore reduces the inventory requirement. Some examples are the electronic transmission of advance
ship notices (ASN) to advise customers of the contents of a shipment and its expected delivery date. The transmission of
purchase orders via electronic data interchange (EDI) can provide more timely and accurate data to suppliers, allowing for
more efficient information in management and production planning. In addition, freight-tracking systems now are being
used in the management of the movement of goods, which provides flexibility that can be used to react to rapidly
changing internal and external needs such as changes in production schedule or changes in customer product delivery
requirements.
It is important that companies develop a supply chain management strategy that is consistent with their overall business
strategy. A key tool to achieving this is to develop a supply chain "diagnostic method" that can be used to improve
operations and reduce inventories. The first consideration here is for the company to examine and understand their
supply and demand planning. This is the key to optimizing resources as well as the timing of activities associated with
procuring raw materials and producing and distributing products. The next step is to begin the process of transitioning
from a functional organization to a process organization. And finally, as companies reorganize to be process driven, then
the performance measures for the various functional departments should be changed to support the overall supply chain
management goals. Some examples of the measurements would include perfect order fulfillment, customer satisfaction,
product quality, total supply chain cost, inventory days supply, and cash-to-cash cycle time.
The process described above will not achieve optimum result desired by supply chain if each subsystem works
independently. To eliminate wasteful and expensive inventory, supply chain needs to be integrated. Supply chain refers to
integrated planning. First, it is concerned with functional integration of purchasing, manufacturing, transportation, and
warehousing activities. It also refers to spatial integration of these activities across geographically dispersed vendors,
facilities, and markets. Finally, it refers to inter-temporal integration of these activities over strategic, tactical, and
operational planning horizon. Effective linkage (integration) among activities (or subsystems) in company's can lead to
competitive advantage in two ways:
(1) Optimization, and (2) Coordination.
This proposes that a firm must optimize linkages in a way to reflect its competitive advantage. It also reinforces that the
ability to coordinate linkages is significant to reducing costs or enhances differentiation. Advances in information
technology (IT) have helped facilitated the developments in integrated supply chain planning and management.
A major goal of the integrated supply chain is the coordination of the logistics, distribution and production, and production
management in a direction that will optimize the value chain of the company and help to minimize transaction costs and
inventory sock keeping unit (SKU) level. Conventionally, we know that a company may hold inventories of raw materials,
parts, work-in-progress, or finished products either to hedge against the uncertainties of supply and demand or to take
advantage of economies of scale associated with manufacturing or acquiring products in large batches. Similarly,
inventories are considered essential to build up reserve for seasonal demands or promotional sales. However, with the new

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reengineering in management and companies not just adopting just-in-time inventory practices but engaging in more
integrated supply chain management, attention has recently been more focused on creating processes that reduce or
eliminate inventories, mainly by reducing or eliminating uncertainties that make them necessary. These efforts have been
motivated in part by the recognition that metrics describing the performance of a company's inventory management
practices can be important signals to shareholders regarding the efficiency of the company's operations and hence its
profitability.
The maintenance of lower transaction costs and optimum inventory control management is not without some costs and
tradeoff. Experiences have shown that managing inventory effectively in our economy and the business environment is
often difficult. For example, in 1993, Dell Computer's stock plunged after the company predicted a loss. Dell acknowledged
that the company was sharply off in its forecast of demand, resulting in inventory write-downs. Also, in 1993, Liz Claiborne
experiences an unexpected earnings decline as a consequence of higher-than-anticipated excess inventories and in 1994,
IBM struggled with shortages in the ThinkPad line due to ineffective inventory management. In recognition of these
difficulties and the urgency to pursue effective integrated supply chain management & to generate lower levels of
inventory and fewer stock-outs for customers, outsourcing is an effective tool.
DISTRIBUTION:
It is the closest ring to customer demand, the first link in the supply chain flow path that ensures that product and service
must be available when the customer wants and needs them. Distribution has evolved from providing a secondary but
necessary role of warehousing and transporting goods to being a critical link in delivering products to the marketplace
within the supply chain. It is a key factor to achieving the service-level goals set forth for the various classes of customers of
the enterprise. To achieve this goal, process efficiency and accuracy are required, hence producers must be able to source
materials, produce goods, and deliver the right products to the right markets on time. This means that distribution
networks need to accept shorter lead times, deliver across the globe, and provide flexible product options at lowest cost. A
solely owned distribution channel by a manufacturer enlarges the horizon of responsibility. The focus area diverges from
core manufacturing to distribution. The risk associated with the losses or damage during distribution is also then bound to
be borne by the manufacturer. An outsourced distribution channel limits your horizon to focus only on the manufacturing
of your product, concentrate upon the development of your operational activity to increase productivity, reduce cost per
unit thereby enhancing the profit margin. Again, the risk associated with distribution is eliminated as the outsourced
enterprise holds the sole responsibility for the losses due to damages, delay and delivery.
As part of the flow-path for supply chain management, production should be aligned with distribution so that we can have
a production system that is capable of moving small or large quantities and standard or custom orders. However, most
companies produce goods according to forecasts, not orders. Part of the reason is that traditional costing and decision-
making tools cannot accommodate the faster, customer-oriented system. To solve this problem, companies need to stop
using standard costing for internal decision-making, and develop throughput accounting, a system that focuses on orders
filled rather than goods produced. Standard costing productivity measurements classify inventory as an asset and thus
encourage production regardless of the number of orders. As a result, standard costing metrics simply do not fit a
production process that emphasizes speed, flexibility, and low inventory. Throughput accounting, on the other hand,
captures conversion speed, i.e. order-to-delivery cycle time and flexibility, i.e. the number of orders filled on time.
Q2: Comment on dynamics of traditional SCM practice?
Companies operating within a traditional supply chain are likely to have procurement, production, and distribution all operating
generally within a departmental structure basis and responding from individual unit to conflicting performance measures. For
example, under sub-optimal operating condition model, where functional units focus on individual performance results,
procurement would be interested in lowest cost if it means buying raw material in larger volumes than is necessary. Also,
production would be interested in maximizing machine utilization, resulting in buildup of work in process and finished goods
inventory. In the same way, distribution would be focus on high service levels and preventing stock-outs.
The consequence of pursuing such traditional approach to supply chain is that activities would not be integrated and inventory
would become a disequilibria factor in demand and supply. For example, in a typical consumer products company, marketing
managers determine sales strategies for the next period (future). Their plan is passed on to the manufacturing managers who
are asked to develop an appropriate production strategy. The joint marketing and manufacturing strategy is then passed on to

19
logistics managers who are given the responsibility of developing appropriate transportation, warehousing, and inventory
strategies to meet it. Thus, although the logistics managers may seek to minimize total logistics costs, larger issues of integrating
strategies for logistics manufacturing, and even marketing are not addressed. Also, comprehensive and rapid information
transfer between the sectors of the pipeline from retail point-of sale back upstream is not in place or implemented. As a result,
the overall supply chain strategy of the consumer products company may be significantly sub-optimal. When the flow path of
the supply chain is not integrated , the organization will find it difficult to achieve its goals and objectives, particularly in
maintaining optimum control in its transaction costs and inventory management. Often the success of an organization depends
not only on how well each sector performs but also on how well the sectors in the organization interface with each other. For
instance, unless logistics, production, and inventory management are well coordinated and integrated, the marketing segment
of procurement may promote goods or service that operations cannot profitably deliver, or operations may turn out goods or
services for which there is no demand. The consequence of this is overall slack in the organization resulting into inadequately
managed transaction costs and excess inventory. Thus, new strategies need to be adopted to gain competitive advantage in
world markets. The operation of businesses with pressures from low-cost, global sources require significant changes in the
traditional ways from which businesses are managed. The new direction requires companies to be more productive, react faster
to market changes, and maintain smaller inventories with low transaction costs.
Part of the strategy for success in supply chain management decision is the adoption of just-in-time management and lean
production. The adoption of this strategy is to help eliminate wasteful and expensive inventory. Integration allows for
coordinated planning, real time exchange of information, bidding and negotiation, transaction execution, and performance
reporting. Integrated supply chain will help envelop all of the communications tools available from enablers of EDI and quick
response (QR) to the internet. The discipline will require participants, both upstream and downstream, to implement new
technologies and use the tools to:
1. Improve service to demanding, inventory-lean stores by providing them with the goods that consumers actually want in a
timely manner;
2. Reduce inventory and lower attendant costs; and
3. Free up capital for other purposes and projects.
As a result of the conscious effort of businesses to integrate the various units of business operations, there is more opportunity
to coordinate activities across the supply chain for competitive advantage.
Q.No 1: List the outsourcing activities in banking industry? Explain any two in detail.
Answer: Outsourcing has become the latest mantra for companies to stay ahead of competitors in this highly competitive
business environment. Banks too are not lagging behind in this latest mania. There has been a drastic change in the way banks
operate in recent times. The increasing competition in the banking sector has forced banks to protect their eroding margins by
retaining their customers by providing value-added services through outsourcing. Outsourcing helps in attaining strategic
objectives by reducing cost and increasing the efficiency through the unburdening of the non-core service activities. In effect,
the outsourcing of banking activities is accelerating at a rapid pace. In order to have a competitive edge, banks have started
outsourcing huge volumes of their non-core services. A recent study by Deloitte revealed that about $356 bn worth of US
financial services will be outsourced to offshore locations in the coming years.
Some of the activities which are outsourced are:
1.Opening ,settlement and closing of accounts.

2.Issue and processing of Cheques
3.Managing of Customer queries (Call centres)
4.Recruitment,Selection and Training of Personnel.
5.Administration of Payroll and Taxation
6.Marketing of bank products
7.Maintaining of Computer and other electronic gadgets
8.Cross Selling of Bank Products like Insurance and Mutual Funds

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9. Credit Card and Debit Card queries
10.Maintenance of ATMs.
Outsourcing of ATM maintenance

Almost all the banks outsource their ATM maintenance to other vendors.SBI inks ATM outsourcing deal with Tata
Communications, C-Edge.
India’s largest lender State Bank of India (SBI) has entered into an agreement with telecom firm Tata Communications Ltd and C-
Edge for the roll-out and management of 500 ATMs. As part of the outsourcing arrangement, the two firms will install ATMs and
operate them for SBI, for which they will be paid on a per-transaction basis. The bank’s ATM switch network will continue to be
managed in-house. Last year, SBI outsourced the roll-out and maintenance of its ATMs on a pilot basis to C-Edge, a joint venture
between SBI and Tata Consultancy Services.
India’s third largest private sector lender, Axis Bank, is planning to outsource the roll-out of ATMs and adopt a pay-per-
transaction model. Some banks with smaller ATM networks, such as YES BANK, also use a pay-per-transaction model.
Outsourcing of IT related work in banks

The major banks have been extensive users of outsourcing and have been at the forefront of pushing the boundaries of
outsourcing onshore, near-shore, and offshore . High-profile examples here include Barclays Bank’s outsourcing arrangement
with Accenture, and Citibank’s outsourcing operations, which it sold to the Indian outsourcing giant, Tata Consultancy Services
(TCS), in October 2008 in a deal worth US$505 million.
In 2004 Barclays signed a £400 million deal with Accenture to outsource applications development for its UK banking systems. A
year earlier, in a £230 million deal, it outsourced its desktop management to IT services firm EDS. Citigroup said that it wanted
to cut US$10.4 billion off its spending over the next three years. This would be achieved by disposing of its own outsourcing
operations and instead moving more of its jobs to outsourcing providers offshore. As part of the deal with Tata, it was agreed
that TCS would provide offshore services to Citi, using Citi’s former operation, in a contract reportedly worth US$2.5 billion over
nine and a half years.
Today it would be difficult to find a major or even a mid-range bank that does not have fairly extensive outsourcing at least of its
IT function, and generally of some business processes as well.
Q.No 2: Benefits of outsourcing financial activities by banks.
Answer: Banks outsource to take advantage of many different benefits. By outsourcing through experienced service providers, a
bank can quickly improve the quality of its services, increase its operational or financial efficiencies, and, in many cases, reduce
costs. Outsourcing may also allow bank management to increase its focus on the core business functions, expand the availability
of bank services, and accelerate the delivery of such services. Banks are able to eliminate many management and administrative
costs, education and training expenses, facility expenditures, and salaries and benefits required by an in-house mortgage
origination staff. Outsourcing reduces the total cost of ownership by reducing the capital investment in developing infrastructure
Some of the other benefits of outsourcing financial activities by banks are:
1.Better alignment between Cost structure and revenue

2.Improve Customer service
3.Brand Building and marketing of bank products
4.Introduce new products and services
5.Access new technology
6.Less Capital investment and effective recycling of funds
7.Gain Competitive advantage
HDFC has started outsourcing its technical services.# For instance, it handed over the management and maintenance of 80 of its
off-site ATMs in Mumbai to NCR. NCR is also managing the ATM network of SBI. Centurion Bank has also given the contract for
the management of its 152 ATMs to Euronet. These service providers have a team of experts who take care of the performance
of ATM network from a remote center. Needless to say, then, that banks do also get benefitted from the domain expertise of
these service providers.
SBI has outsourced its networking services and maintenance of more than 1,500 branches and 3,000 ATMs in 49 cities to
Datacraft Bank of India also gave its outsourcing contract to India Switch company in the year 2002.

21
Yes Bank, one of the private banks, has signed a seven-year outsourcing deal with Wipro Infotech. The imperative behind
outsourcing complete IT infrastructure is to quickly set-up its base and gain acceptance against ICICI Bank, HDFC Bank, SBI, etc.
Wipro Infotech will support the bank’s operations in rolling out its branches, networking, managing the data center, and back-up
support for disaster management. However, as per RBI directives, banks have to exercise due diligence while appointing third
parties to carry out banks’ non-core outsourcing activities.
Q.No 3: What are the reasons to outsource in Pharmaceutical industry.
Answer: Pharmaceutical companies have long recognized the need to leverage in-house resources with specialised,competent
partners. In many cases, mastering the entire skill range within the industry is no longer a viable option for smaller companies.
Even large, well-established manufacturers may lack the flexibility needed to implement and perform critical
projects in a timely fashion. Outsourcing has also become a strategy of choice for moving multiple projects forward
simultaneously. Furthermore, demand for contract manufacturing services is expected to increase as drug companies rationalize
their manufacturing facilities, many of which currently operate below capacity.
According to a recent multi-industry survey conducted by The Outsourcing Institute, 55% of companies outsource to improve
company focus. Nearly as many (54%) rely on outsourcing to reduce or control operating costs, while 38% want to free
resources for other purposes and 36% want to gain access to world-class capabilities. Benefits such as reduced time to market
and risk sharing ,rank significantly lower at 18% and 12%, respectively. As recently as the late 1990s, focusing resources on ‘core
competencies’ was a stated priority for many leading pharmaceutical manufacturers. However, today’s climate of increased
competition, fewer new product approvals and downward pressure on prices has caused them to re-examine their priorities,
and now risk sharing and speed to market have moved to the head of the list.
Pharma alliance or partnership holds cost benefit advantage by reducing huge amounts of capital outlay for producing latest
technology in-house. Outsourcing allows pharma companies to ramp up the R&D operations at a fast pace with minimal capital
outlay.
Some of the reasons of Outsourcing are:
1. Outsourcing reduce the overall costs by 30% to 35%

2. Faster and cheaper to have discovery work outsourced, reduces drug development cost
3. Reduces problems faced during the regulatory processes around the world
4. Improve manufacturing efficiencies
5. Reduce excess production capacity by divesting facilities
6. Minimize investments in capital-intensive facilities
7. Improve net earnings and cash flow;
8. Divert resources to focus on other competencies like marketing
Outsourcing can allow pharma companies to establish consistency and efficiency across sprawling international networks of
commercial, supply chain and manufacturing organizations. Outsourcing if managed and executed strategically has every
potential to add value to the shareholder value and keep the investor community happy.
1. What are the essentials points considered for vendor selection in outsourcing?
A:
Vendor selection is a crucial, complex and challenging process. It is essential to choose to the correct vendor from the available
pool of vendor. Following are the some points which need to be considered while selecting a vendor:
Commitment to Quality
It is important to know how much a company is committed towards delivering the quality product/ services. Vendor is selected
based on the focus of the company towards achieving the committed quality to the client

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Price
Price is a crucial factor while selecting the vendor. The best combination is lower price for superior quality. Company should not
compromise on quality and look of vendor providing lower price for it because in the end it will directly impact on the business
of the company.
Company Stability
It is essential to know how the company is performing. Company with stable, rising results is better choice over the company
with irregular stability in terms of performance, financial position.
Reputation
The reputation of vendor in the industry is also important because it a intangible factor that is developed due to quality service
to customer over long period. The vendor with reputation in the industry certainly has edge over others because it is known for
its better service which any company looks for.
Flexible Contract Terms
If the vendor is flexible as per the terms and condition of the vendor selector the nit is preferred. The market conditions are
uncertain and demand/supply also varies continuously. The flexible contract helps to select vendor which will be modify the
terms as stated in the contract so that it can be compete with the others without excess investment for unnecessary reason.
Scope of Resources
The availability of the resources with required knowledge skill set is a important aspect. It is important to get the information of
the availability resources which are required because it will directly affect the cost factor. Recruiting new resource or training
requirement involved cost with it. Hence it is important to know the resources information while selecting resources
Location
Vendor location is also a important while selecting the vendor. Sometimes it is required to visit the vendor location for which
vendor location should be easily accessible. The location should be well connected by means of transport, communication
channel and infrastructure which are the important factor while selecting a vendor.
Existing Relationship
Analyzing the existing relationship of vendor with other clients, its performance and any complaints will also give information
about how the vendor is while delivering its services to client. Company looks for a vendor with good relation and prompt it
meeting and delivering the services as stated in contract.
The vendor with unhealthy relationship or complaints can be removed from the potential vendor list based on its existing
relationship with clients.
The vendor selection process can be a very complicated and emotional undertaking if you don't know how to approach it from
the very start. Here are five steps to help you select the right vendor for your business.
1. Analyze the Business Requirements
This is the toughest part of the vendor selection process. Success here will put you on the right track in selecting the right
vendor at the right price. Lack of effort, poor planning or taking shortcuts will seriously jeopardize the success of the vendor
selection process. This part of the process will be shorter and less complex for basic part and commodity vendors (eg. basic raw
materials, office supplies, gas/electric, etc.) and fundamental services (eg. janitorial, heating/cooling system maintenance, office
machine service contracts, etc.). It will take longer for more complex parts and multifaceted services (eg. Software outsourcing,

23
call center services, etc.). Regardless of the size and scope of the material or service that you will be selecting a vendor for,
following these steps will help insure the success of rest of the vendor selection process.
Before you begin to gather data or perform interviews, assemble a team of people who have a vested interest in this particular
vendor selection process. The first task that the vendor selection team needs accomplish is to define, in writing, the product,
material or service that you are searching for a vendor. Next define the technical and business requirements. Also, define the
vendor requirements. Finally, publish your document to the areas relevant to this vendor selection process and seek their input.
Have the team analyze the comments and create a final document. In summary:
1. Assemble an Evaluation Team

2. Define the Product, Material or Service
3. Define the Technical and Business Requirements
4. Define the Vendor Requirements
5. Publish a Requirements Document for Approval
2. Vendor Search
The second step in the vendor selection process is to execute a vendor search in order to compile a comprehensive list of
vendors that may be able to meet the requirements as defined in the business analysis phase. After that is completed, you will
need to narrow the list of vendors down to only those which you want to request more information from. Next, compose a
Request for Information (RFI) and sent it to each potential vendor. Finally, create a "short list" of vendors that will receive your
Request for Proposal (RFP) or Request for Quotation (RFQ).
Now that you have agreement on the business and vendor requirements, the team now must start to search for possible
vendors that will be able to deliver the material, product or service. The larger the scope of the vendor selection process the
more vendors you should put on the table. Of course, not all vendors will meet your minimum requirements and the team will
have to decide which vendors you will seek more information from. Next write a Request for Information (RFI) and send it to the
selected vendors. Finally, evaluate their responses and select a small number of vendors that will make the "Short List" and
move on to the next round. In summary:
1. Compile a List of Possible Vendors

2. Select Vendors to Request More Information From
3. Write a Request for Information (RFI)
4. Evaluate Responses and Create a "Short List" of Vendors
3. Request for Proposal (RFP) and Request for Quotation (RFQ)
Now that you have analyzed your business requirements and completed your vendor search, you are ready to start the meat-
and-potatoes of the vendor selection process. A well written Request for Proposal (RFP) or Request for Quotation (RFQ) is the
key for selecting the best vendor at the best value for your company. Writing a RFP or RFQ is not difficult if you understand the
objectives and function of the document.
The business requirements are defined and you have a short list of vendors that you want to evaluate. It is now time to write
a Request for Proposal or Request for Quotation. Whichever format you decide, your RFP or RFQ should contain the following
sections:
1. Submission Details
2. Introduction and Executive Summary
3. Business Overview & Background
4. Detailed Specifications
5. Assumptions & Constraints

24
6. Terms and Conditions
7. Selection Criteria
4. Proposal Evaluation and Vendor Selection
The proposal evaluation for the vendor selection process for smaller projects and commodities will be relatively straight
forward. For bigger projects, complex parts or multifaceted services, evaluating proposals and coming to a consensus will be
more involved. The main objective of this phase is to minimize human emotion and political positioning in order to arrive at a
decision that is in the best interest of the company. Be thorough in your investigation, seek input from all stakeholders and use
the following methodology to lead the team to a unified vendor selection decision.
The main objective of this phase is to minimize human emotion and political positioning in order to arrive at a decision that is in
the best interest of the company. Be thorough in your investigation, seek input from all stakeholders and use the following
methodology to lead the team to a unified vendor selection decision:
1. Preliminary Review of All Vendor Proposals

2. Record Business Requirements and Vendor Requirements
3. Assign Importance Value for Each Requirement
4. Assign a Performance Value for Each Requirement
5. Calculate a Total Performance Score
6. Select a the Winning Vendor
5. Contract Negotiation Strategies
The final stage in the vendor selection process is developing a contract negotiation strategy. The worst contract negotiation
objective is to bleed every last cent out of the vendor for the lowest price. Remember, you want to "partner" with your vendor
so that both of you will meet your corporate goals and objectives by signing the contract. Successful contract negotiation means
that both sides look for positives that benefit both parties in every area while achieving a fair and equitable deal. A signed
contract that benefits both parties will provide a firm foundation to build a long lasting relationship with your vendor.
The final stage in the vendor selection process is developing a contract negotiation strategy. Remember, you want to "partner"
with your vendor and not "take them to the cleaners." Review your objectives for your contract negotiation and plan for the
negotiations be covering the following items:
1. List Rank Your Priorities Along With Alternatives

2. Know the Difference Between What You Need and What You Want
3. Know Your Bottom Line So You Know When to Walk Away
4. Define Any Time Constraints and Benchmarks
5. Assess Potential Liabilities and Risks
6. Confidentiality, non-compete, dispute resolution, changes in requirements
7. Do the Same for Your Vendor (i.e. Walk a Mile in Their Shoes)
2. Compare India and China on following components

Telecommunication
Quality
Transport
Education
Cost
A:
Telecommunication

25
When it comes to outsourcing any work to other country, communication is very important. By means of telecommunication
modes company from one country and know the progress of the outsources work that is going on in selected outsourcing
county.
India
As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile
subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of
subscribers in India will exceed the total subscriber count in the China by 2013.
India has both government and private player which are competing with each other to give better service without compromising
on quality. India has all the required telecom facilities with it.
India has surplus bandwidth of telecommunication to take burden of extra load. Though Indian Telecommunication is the
second highest grown sector in country, the broadband speed of India is medium. When it comes to outsources worked, high
speed internet is required which India has to work on. The new telecommunication technologies are also entering India recently
like 3G as compare to China
China
With 1.3 billion citizens, China owns the world’s largest fixed-line and mobile network in terms of both network capacity and
number of subscribers. The telecommunication sector of China is dominated by government player. Private players emerged in
the year 2001. China has more internet users than India but at the same time has stringent rules over internet use which
sometimes problematic for the companies. The latest example is of Google planning to shut down their operation due to
interference by government of China.
India and China almost have same telecommunication facilities available with them.
Quality:
Quality is a major aspect when it comes to outsourcing. Client looks for better quality in less price. Many times they are ready to
pay little high if they are getting better quality.
India
India has the most quality certified companies in world. It has more than 100 companies which are either ISO 9000 or CMMI 5
certified. India also focused on TQM from its early days when outsourcing began. India is a country which provides quality
services/products at lower cost.
India is considered as benchmark when it comes to quality. India intellectual property rights are also strict as compare to china
due to which companies prefer outsourcing to India.
China
China is a manufacturing hub. However, when it comes to quality, china lacks behind. The many products that china provides do
not meet the quality standards. Intellectual property rights of china are also poor. Due to these companies face problem due to
locally made duplicate products in China. Whenever a new mobile phone is launched by any company, same duplicate model
made in china hits a market soon. Though China has lower labor cost than India, the quality is also poor.
Transport
Transport plays a major role when it comes to preferred location for outsourcing.

26
India
All the major cities in India all well connected to each other and to world. India has very good connectivity using rail, road, air,
water any by pipeline
The rail network traverses through the length and breadth of the country, covering 6,909 stations over a total route length of
around 63,465 km (39,435 mi)
India has a network of National Highways connecting all the major cities and state capitals, forming the economic backbone of
the country.
India also has airports in major cities as well as minor cities too. This allows to select new location for outsourcing there by
reducing labor cost due to geographical advantage.
China
China is known for its infrastructure and its far ahead of India. They have network of roads, number of airports, faster rail
transport and ports. Being a manufacturing hub, China focused more on its infrastructure long time ago. The infrastructure
facilities are superior and positive for outsourcing. Though they have superior infrastructure they are also facing traffic
congestion problem like India.
Thus China has edge over India as far as infrastructure in concerned.
Education
Education is the factor without which outsourcing to any country is not possible. Labor pool which is rich of knowledge, skill set
is always preferred for any work.
India
From ancient time, India is considered as destination for education. Today India has network of school, technical/non technical
colleges and management schools. The education system in India is renowned. India is producing 5-6 million of graduates and
0.5 millions of post graduates every year. Apart from that India comes second in terms of students going aboard for their higher
studies. Today many of the students returning back to India after completing their study from other countries which is other way
around in China. India concentrated on developing and wide spreading educational system across the country.
Indians are known for their brain, knowledge, expertise and skill set. Fluent English with neutral ascent is a major advantage
that India has.
China
China is producing 7-8 million of graduates and 0.6 millions of post graduates per year which is higher than India. Chinese
students prefer to go abroad for their higher studies and then settle their itself. China concentrated on its world class
infrastructure development across the country rather than focusing on educational system.
China lacks people speaking English language and due to which they are lagging behind India in terms of outsourcing of service
industry. Now government of china is focusing on its education system and making English as a compulsory language to be
competent with India.

27
As far as education factor is considered, India is slightly ahead of china
Cost
The main reason behind outsourcing is getting work done it lower cost. China and India are the number 1 and two countries in
world in terms of population respectively. Hence large labor pool is available in both the countries.
India
India is known for a low cost country. When a work is given to India by a company, it’s operation cost cut by 40% which is
substantially large. At the same time they get quality of work which any company looks for. Outsourcing to India is mainly
related to IT/ITES sector which is located in major cities. Since these major cities are exhausted and also resulted into higher cost
of living, India needs to look for new cities and develop those cities in order to gain advantage of low cost destination for
outsourcing.
China
When a work is outsourced to China, reduction in operational cost is 45%, little higher than India. However, the cost involved in
giving the basic benefits to labors as per government policy is higher. China already has a infrastructure ready with them. Hence
they do not need to invest more in order to build new infrastructure and look for alternatives. Due to ready availability of
infrastructure which normally cost substantial amount, China is preferred over India in terms of cost. But the company has to
compromise on its quality.
Cost wise India and China both are almost equal
Ans:
India
Opportunities
• NASSCOM -India can be branded as a quality outsourcing destination
• $69 billion ITES business by 2010,$97.5 billion IT market by 2010
• Big potential market in education Sector & emerging new market Segment in services (create it)
• General Agreement of trade on Services
• Research & Development capability
• Generate intellectual property
• Resource Building capacity
• Competition- cost – Quality service
• Collaboration : win-win thinking
• Hybrid solution–balancing & blending
Threats

28
• Unstable government, Self centred political leadership
• Slow & Dysfunctional judiciary and corrupt law enforcers
• Regulation, protection and restriction
• Mechanistic -stable-Layered-complex system
• Corruption, Ignorance & Complacency
• High competitive & marketing forces
• The anti-outsourcing legislation in the US states - Other IT destinations
 Self centered political leadership
 To patent Indian intellectual property by outsider (unawareness about own research)
 Diversity vs. Imbalance- clashes
 Regional-Religion-caste-culture conflicts
 Migration of all branch to software job
 Job seeking mind sets, not job creator
China
Opportunities:
• Continuous development of global service outsourcing industry and the huge future market
According to UNCTAD statistics, in the current world's largest 1,000 companies, about 70% of enterprises have yet to
outsource any business processes low-cost countries, indicating service outsourcing industry, there will still be a great
future market growth. In addition, many multinational companies in China and domestic large enterprises have
gradually its non-core, non-core business contracted to local companies, creating a larger market within the package.
For service outsourcing of domestic demand and external demand have broadened the scope for development of
service outsourcing
• The multinational investment in China's service outsourcing industry, significantly faster
In order to serve in China's manufacturing investment projects, and get more opportunities in emerging markets,
many multinational companies in recent years began to set up service centers in China, R & D center, to extend
the industrial chain. At the same time, many multinational companies operating in order to spread the risk of
excessive accumulation began a conscious part of the business will be turned to China

29
• Foreign direct investment in China's service industry rapid growth of the area of investment to further expand
First half of 2007, the National service industry 13.8 billion in actual foreign investment, an increase of 58.2%. The
United Nations response from 2002 to 2005 7 Yuen China's service outsourcing development, a survey shows that
inflows of foreign direct investment projects in the 'Customer Support Center' an, China ranked the world's first 6; in
'Shared Services Center' 1, China ranked No. 8; in 'R & D centers' an, China ranked second. According to Conill
Company the operational capacity of countries to attract offshore outsourcing a comprehensive assessment of China
ranks second only to India.
Threats:
• More intense international competition in outsourcing
With the increasing international competition in manufacturing upgrades and global markets become saturated, many
developing countries will undertake service outsourcing as a major Strategy for the country's economic rise and take a
number of measures to the development of service outsourcing industry, to create favourable conditions for, and
actively seize the international outsourcing market.
• Increase the difficulty of developing markets in Europe
First, present, China's service outsourcing enterprises to undertake a smaller scale, international competitiveness is
not high coupled with marketing and sales efforts is not sufficient to undertake the software outsourcing from Europe
and the United States alone, has hampered China's service outsourcing to undertake a big country. 2 is due to the
launching of service outsourcing will be contracted to a certain extent on the domestic job market, have a negative
impact, so in recent years, developed countries, especially in the United States there is debate on service outsourcing,
which China's enterprises to expand their European and American markets will have a certain influence.
• The manpower shortage position could hardly be resolved within the short term, and the serious brain drain
At present, China is closely related to outsourcing and service professionals are still a huge gap between supply and
demand. Meanwhile, multinational corporations to enter China's service outsourcing market in the use of high salaries
to attract high-skilled personnel, many of the elite lost to foreign companies, and further increased the high-end talent
shortage, weakening its capacity for sustainable development.
• Service outsourcing market in Japan and South Korea limitations
Japan and South Korea is currently China's service outsourcing market is the main international markets. However, in
comparison with the European and American markets, Japan and Korea outsourcing market, there are many
limitations. If Japanese companies are generally used to carry directly to the domestic outsourcing companies
contracted by these enterprises in the upper design work, and then sub-contract to the underlying overseas to reduce
costs. This will enable China's service outsourcing industry, the most significant in the value chain, and the bottom of a
very low value
Q.1 Write Notes On:
1. Future of Outsourcing:
• Outsourcing continue to be one of the top business trends
• Growing demand for skilled workers in developed countries
• Best-shoring is now the best emerging strategy for an outsourcing business
• Globalization of the workforce: push to increase the quality of outsourcing skills set
• IT outsourcing will be smaller and chunkier where outsourcing contracts are Shorter in duration and Smaller in
value
• By 2015 China will be No. 1, India No: 2 in the global top five outsourcing destinations.
2. Vested Outsourcing:
It is the Next Generation of Outsourcing Business model. Vested Outsourcing is new business model that will
transform outsourcing procedures the way business management strategies Lean and Six Sigma transformed
manufacturing.

30
Vested Outsourcing is a model paradigm shift in how the outsourcing company and their service
providers do business. At the heart of a vested outsourcing agreement are five major rules:
• Focus on outcomes, not transactions.

• Focus on the WHAT, not the HOW.
• Agree on clearly defined and measurable outcomes.
• Optimize pricing model incentives for cost/service trade-offs.
• Governance structure provides insight, not merely oversight
Q.2 What is Multisourcing? What are the benefits to clients and disadvantages to vendor in this case?
Multisourcing: “A practice by mega-deal customers to unbundle their work, awarding it in separate contracts to specialized
suppliers”
 Benefits to Customer (Client):

• Mitigation of risk
• Increase in competition amongst service providers
• Quality Service
 Disadvantages to Supplier (Vendor):
• Lose economies of scale
• Cost more than a single mega deal : Increased complexity in Trade-off
• Managing with Multiple delivery models
Q.3 How cloud acts as future of IT outsourcing? Explain.
• Helping to chunk up outsourcing into even finer granules resulting into fine-grained outsourcing.
• It is more manageable option as ddigested on on-demand services from third-party providers
• Factors driving Cloud and SOA development:
 Busy IT shops - Especially those with large enterprise systems — may not have enough human resources to
effectively deploy increasingly complex enterprise systems, network, and architecture.
 Infrastructures supported by cloud resources and based on SOA principles will lower the barrier of entry for
smaller outsourcing providers, which will in turn multiply their numbers
 This make outsourcing less of the onerous either/or business decision it has been, as chunks of applications or
services can be outsourced or brought in house as the situation fits, with minimal disruption to IT operations and
priorities.
Q.4 What could be India’s outsourcing scene in 10 years?
Situation 1: No Let-up in Demand for Outsourcing Services
First situation assumes there will be no let-up in demand for outsourcing services from India
over the next decade.

31
Figure 1: Stability in India vs. availability of skilled people.
The variable on the x-axis in Figure 1 is the level of stability in India -- economic, political and social. This has a direct bearing on
risk perceptions and the cost of doing business in India.
The variable on the y-axis is the availability of quality manpower. The timeframe assumed in this analysis is about a decade. Let's
look at four scenarios.
1: The Sky's the Limit!
The education system improves, and there's a high level of stability in India. This is a win-win situation, due to the assumption of
unlimited demand.
 The Indian government gets its act together on education and relaxes controls, allowing for more private participation.
Simultaneously, it beefs up public delivery of education. These reforms make the Indian education system world-class.
 Foreign students flock to Indian universities and many remain to work in India.
 Accelerated reforms in power, telecom, rural development, labor policies, healthcare, etc., are implemented, and large
investments flow into the Indian infrastructure.
 Spending capacity in the economy increases, and multinationals invest in large numbers.
The economy in general grows more robust and competitive.
Impact on Outsourcing
 Industry and service sectors show high growth rates, benefiting the outsourcing industry, serving both domestic and
international demand.
 High value-adding, intellectual work starts to come to India. Indian outsourcing companies dominate the global
competitive scenario as access to capital becomes easier.
 Indian companies acquire or build international capacity aggressively.

32
2: Chaos Reigns!
The education system as well as social stability worsens in tandem. Chaos in general -- whether economic, social or political --
coupled with no/slow improvements in the current education system spell doom for the outsourcing industry, in spite of
unlimited demand.
 Lack of reform in education means lots of 'degrees' but poor skills.

 More reservations along political lines dilute the quality of education.
 A breakdown of the social system leads to increased crime and unrest in society.
 Corruption increases and impacts private sector investment -- domestic as well as foreign.
 Economic growth slows down as protectionism and inward-looking economics dominate foreign policy decisions.
 India is viewed as a bad place to do business
 American and European companies look at China, Philippines, South Africa and other nations for services.
 Fraud increases; security concerns multiply. Higher value work involving data and IPR issues stop coming to India.
 India is no longer a favored destination for outsourcing and gets saddled with low-end, low-cost work.
3: Functional Anarchy
There is low politico-social stability with regular "incidents," but industry lobbies manage to push education reforms forward.
 Reforms make the Indian education system improve drastically.

 The level of education in general rises, and the number of graduates and postgraduates grows rapidly.
 Growth slows down as protectionism and inward-looking economics dominate foreign policy decisions.
 Public sector units continue to be inefficient and corrupt.
 Infrastructure continues to be in a mess.
 Private sector manages to continue to grow due to better quality labor, but risks increase.
 India is viewed as a risky place to do business and buyers look at greater diversification.
 The outsourcing industry faces no shortage of people, especially since employment options in other sectors don't look
as inviting.
 Work still keeps coming to India, although higher value work involving data and IPR issues doesn't come in the same
proportion.
4: Misplaced Priorities
The education system deteriorates although there's a high level of stability
 Education reforms aren't taken forward and supply of quality labor stagnates.
 Students prefer to get educated abroad, but overall stability in India ensures good jobs.

33
 Infrastructure and labor reforms make the economy more efficient and competitive.
 There are political and judicial reforms, improving the quality of governance.
 India is perceived as a good place for business, although quality of labor remains variable.
 Outsourcing is restricted to lower value-adding work, except for certain pockets.
 Industry growth is constrained by manpower availability, and attrition and wage inflation reach alarming proportions.
 Falling Indian competitiveness benefits other countries, including China, Philippines and South Africa.
Situation 2: Major US Backlash?
Our first situation examines the potential success (or failure) of Indian outsourcing based on Indian variables, even as demand
remains robust. In this second situation, we use demand as a variable, possibly caused by a "backlash" against jobs being moved
offshore, whether to India or any other location.
What effect would such a backlash have on the Indian outsourcing industry? We now analyze
this against the likely availability of good quality manpower in India, and examine the resulting
four scenarios for outsourcing to India.
Figure 2: Outsourcing backlash in the United States vs. availibility

of skilled people in India.

34
1: Talent Will Never Go Wasted
There's high backlash, which translates to a lower demand for outsourcing, even with an abundance of high quality manpower
in India.
 The Indian government goes ahead with key educational reforms and high quality graduates and post-graduates are
produced in Indian universities.
 If the Indian economy continues to do well, manpower prefers to work outside the outsourcing industry for want of
challenging work and higher pay.
 Slowing business from the United States forces Indian vendors to look at demand from other countries. Europe,
Middle East and Asia Pacific emerge as new client bases. However, overall offshoring growth slows.
 High quality manpower looks to migrate to the United States.
 Slow demand ensures that wages remain under control, helping India retain the cost advantage and ensuring its global
leadership position.
 Some American companies, which aren't allowed to outsource, look to employ qualified Indians. This intensifies large-
scale immigration of Indian skilled professionals to the United States.
2: Scarcity amid Plenty
There's adequate demand, but a dearth of quality manpower in India to serve the outsourcing industry.
 Education reforms aren't taken forward and supply of quality labor stagnates.
 The small numbers of qualified professionals find great demand from outsourcing as well as other industries in India.
 India continues to get most of the low quality, volume-based work, but the higher end, more intellectual work doesn't
come in the same proportion.
 A dearth of talent leads to poaching and severe pressure on salaries, which erodes India's cost advantage.
 American client firms start to look at other competing destinations like China, Philippines and East European
countries. India loses its other strategic advantage -- the ability to ramp up quickly.
3: All's Well
There's high quality talent and adequate demand due to low backlash.
 The Indian government moves ahead with key educational reforms, producing high quality graduates and post-
graduates in Indian universities.
 Foreign students flock to Indian universities, and many remain to work in India.
 Many qualified Indians continue to migrate, but there's enough quality manpower in India, leading to a high level of
entrepreneurship, as well as the availability of managerial talent for the outsourcing industry.

35
 Offshoring witnesses a high growth rate for over a decade. High value-adding, intellectual work also starts to come to
India.
4: Another Bubble?
There's a lower demand for outsourcing due to high backlash and a dearth of quality manpower in India.
 Education reforms don't move forward and the supply of quality labor stagnates.
 The better, more qualified workers look to migrate to the United States.
 The slowdown in demand helps keep wages in check, even though talent is still in relatively short supply.
 Slowing US business forces Indian vendors to look at demand from other countries. Europe, Middle East and Asia
Pacific emerge as new client bases.
 Even while the rest of the Indian economy continues to do well, outsourcing companies struggle to find talent.
 Indian outsourcing companies acquire capacity in the United States, as well as in other destinations.

36

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SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

OUTSOURCING & IT RELATED SERVICES

Faculty: Submitted By: MRS. DIVYA LEEKHA

Sarfaraz Khan (44)

Krishna Sharma (19)

Outsourcing and IT Related Services Page 1

Answer: Advantages of IT outsourcing:

• Outsourcing can help you streamline your business operations.

• Outsourcing can make your organization more flexible to change.

• You can experience an increased control of your business with outsourcing.

• Off shoring can help your organization save on capital expenditures.

• Outsourcing can help your organization to free up its cash flow.

• Sharing your business risks is possible with outsourcing.

• Off shoring can create potential redundancies for your organization.

Outsourcing and IT Related Services Page 2

An opportunity opens for India in the fields of:

-IT Operation (Technology Services)

• Application Development and Maintenance

• E-commerce, ERP implementation & support etc..

-BPO, KPO, etc operations

Main Reasons for Outsourcing to India are follows:

 ANS: Availability of qualified resources

 English Speaking Available Resources

 knowledge skills – Technical & Business skills

 Cost and quality

 Highest English speakers among other developing countries

 Better tax structures - SEZ

 Enthusiastic and young population

Q3) SWOT Analysis - Outsourcing to India

Outsourcing and IT Related Services Page 3

SWOT Analysis - Outsourcing to India

- Highly skilled, English-speaking workforce

- Abundant & Cheaper manpower

- Lower attrition rates than in the West

- Lower response time with efficient and effective service

- Recent months have seen a rise in the level of attrition rates

- The cost of telecom and network infrastructure is much higher

- India can be branded as a quality outsourcing destination

- $69 billion ITES business by 2010

- $97.5 billion IT (consulting, software solutions) market by 2010

Outsourcing and IT Related Services Page 4

- Workers in British Telecom have protested against outsourcing of

Work to Indian companies

the cost factor

4) Future Trends of IT Outsourcing

Current outsourcing trends worldwide

Future outsourcing trends worldwide

3. Customers will take greater control in driving and designing deals.

Outsourcing and IT Related Services Page 5

Opportunities for India

Near-shoring as a business strategy

India can provide high-quality engineering services in the fields of:

Outsourcing and IT Related Services Page 6

o Plant Automation Services

o Enterprise Asset Management and OEM solutions

4. Remote Infrastructure Management Services

Challenges for India

Human resources and training

Outsourcing and IT Related Services Page 7

Low skilled quantitative tasks include the following:

 Paralegal services and legal coding

 Legal memo development

High skilled qualitative tasks include the following: