MADANAPALLI INSTITUTE OF TECHNOLOGY AND SCIENCE

NAME: K. KARTHIK

ROLLNO: 21691E0051

CLASS: 2ND MBA A/SEC

SUBJECT: STRATEGIC MANAGEMENT

ASSIGNMENT NO: 2

FACULTY: SREEKANTH SIR

Evaluate the outsourcing strategies of a company:

About IBM:
IBM has been dedicated to every client's success and to creating innovations
that matter for the world.
Biers believe in progress—that the application of intelligence, reason and science can
improve business, society and the human condition IBM has developed a thoughtful,
comprehensive approach to corporate citizenship that we believe aligns with IBM’s values
and maximised the impact we can make as a global enterprise. We focus on specific societal
issues, including the environment, community economic development, education and skills,
public health, literacy, language and culture. The mission of India CSR is to foster life-long
learning opportunities across India through streamlined initiatives that cut pathways across
education [access], skills/employability [inclusion], and employment [equity and quality].
IBM’s greatest asset is the Imbert. We believe our strength lies in the diversity of our
employees. IBM encourages creative pursuits and passions outside of work, because when
IBMers can explore their curiosity, it gives all of us a new outlook on the world and its
possibilities for emerging tech. Together, IBM can drive progress through meaningful
innovation and action. The new generation of hybrid cloud enables you to build once, deploy
anywhere and manage it all from a single pane of glass. So your business can adapt and
transform like never before.
Mission: Our mission and purpose is to be a catalyst that makes the world work better. A
catalyst is an agent of change. As catalysts, Biers collaborate to release new energy. We forge
partnerships and bring together powerful combinations of people and technology. We
combine the methods of science with the dynamism business to do things neither could do on
its own. We solve difficult problems and amplify the impact of our solutions with speed and
scale. Our work is focused on the most mission-critical systems on the planet: electrical grids,
airlines, mobile networks, banks, transportation systems, healthcare systems. These systems
are more than just engines of economic growth. They are the systems that support modern
society. In making them faster, more productive, and more secure, we don’t just make
business work better, we make the world work better.
Vision: IBM’s greatest invention is the IBMer. We believe that through the application of
intelligence, reason and science, we can improve business, society and the human condition,
bringing the power of an open hybrid cloud and AI strategy to life for our clients and partners
around the world.

BM has been present in India since 1951. Since inception, IBM India has expanded Its
operations with regional headquarters in Bangalore and offices across 20 cities. IBM India
has established itself as one of the leaders in the Indian Information Technology Industry.

As a leading cognitive solutions and cloud platform company, innovation is at the core of the
IBM company strategy. This is reflected in the end-to-end solutions delivered to clients,
which span from software and systems hardware to a broad range of infrastructure, cognitive,
cloud and consulting services. IBM helps clients solve complex business and technical issues
by delivering deep business process and industry expertise. This is enhanced with advanced
analytics, research capabilities, comprehensive IT infrastructure knowledge and the proven
ability to implement enterprise solutions to deliver bottom line value to businesses and
governments worldwide.

OUT SOURCING STRATEGIES OF IBM

BANGALORE: IBM, the world’s No. 1 computing company, is making inroads into the Indian
IT market through its unique services model called `strategic outsourcing.'' 
Here, IBM completely takes over the IT-related activities of its clients by setting up a dedicated
team at the client’s premises.
Today’s business leaders need to rethink operations, designing and sequencing workflows
end-to-end with a way that unlocks, connects, and uses data where it is most effective.

Process modernization that improves agility and delivers outcomes often requires a broader
set business and technical skills than most organizations can afford to assemble in-house.

Our outcomes-based business process outsourcing model advances essential processes across
your business–including marketing, customer service, HR, finance, procurement, and supply
chain management. Our proven approach allows clients to focus on their strategic imperatives
while also fulfilling customer, partner and employee expectations.

Access our complete BPO ecosystem of talent, intellectual property and partnerships, and
deliver innovation faster to your business, while also improving growth, efficiency and
profitability.

Outsourcing refers to the planned use of resources acquired from other agencies. The
outsourced resources execute duties initially done by the people and machinery that internally
performed the duties for the organization initially. After an assessment of the institution, the
human resource department determines the need to introduce new resources to the
organization (Weimer & Souring 2009). In a corporation, the performance evaluation team
can realize lack of enthusiasm among the internal staff.

Alternatively, other company resources such as computers could require replacement making
it imperative to device an action plan. Through outsourcing, organizations including IBM are
able to get external labor-force, machinery, and communication resources in order to improve
the quality of their work. Outsourcing has many advantages and disadvantages; it involves an
entire facility shift especially for companies that replace their resources completely (Miozzo
& Grimshaw 2011).

Organizations that require new resources often sign contracts with agencies that supply the
requisite human resources and machinery. Efficiency is paramount for organizations and
outsourcing is a common means of getting the best resources for accomplishing tasks within
the organization (Plunkett 2013). This paper intends to discuss how IBM benefits from
outsourcing, and the demerits of assuming such a plan.

The International Business Machines Corporation (IBM) headquartered in Armonk, New

York, United States, deals in production of technological devices. Many Banks use
Automated Teller Machines and various scanners from the company. Besides physical
production of such devices, IBM equally offers consultation services to various clients across
the US and other countries in which it invests (Morschett, Klein, & Zentes 2010).

Considering that IBM is a multinational corporation, it needs to keep up with competition

from other electronic firms that are likely to provide affordable handheld computers to
replace IBM products. The world is volatile and so is the consumer environment. The daily
societal needs keep changing as the external environment and the competitors influence them.

Research is an important element of a company such as IBM; it enables firms to offer

services that fulfill the needs of the microenvironment and the macro-environment. As such,
it is important for IBM to carry out a PEST-C analysis of its environment and a SWOT
analysis of the organization. The two would be vital for IBM to device an outsourcing plan in
order to replace the in-house team with new and creative individuals or machinery (Lasserre
2012).

Companies such as Samsung, Apple, and HTC venture into new productions daily. In
essence, each competing force strives to carry out research in order to understand consumer
demand. Sometimes, the employees working in-house cannot provide the requisite human
resources to increase production (Watson 2013).

Consumer demands often change and become complex since resources will always be limited
in comparison to consumers (Yanga, Wacker, & Sheu 2012). Naturally, the supply and
demand curve applies in this scenario since society expects IBM to device systems that
succeed the existing products and services (Varajao 2012). This explains why customers will
often demand for something new from the service providers.

The human resources at IBM and the machinery used to perform functions including the
management have a direct link to the firm’s organization since its inception in 1945. After
102 years of service, the company needs to outsource fresh expertise from agencies that have
the resources and capabilities to scrutinize people and machinery effectively (Ibm platform
computing solutions 2012).

Currently, the company cannot remain productive by utilizing the resources it had in 1911
because the world needs new products and services. The company uses over 10 laboratories
across the world to help creative employees generate and implement ideas. In addition, the
same laboratories assist in patenting of innovations to stop competitors from acquiring such
ideas (Varejao 2012).

Impact of outsourcing strategies:

IBM Insurance Outsourcing Services (IIOS) ensures that the target organization gets
resources that will increase productivity. IBM’s business objective is to provide efficient and
effective services to consumers across the world. When the World Bank sought its services
when acquiring the ATM machines, this signified the quality of services it provided (Miozzo
& Grimshaw 2011). However, the needs of customers often change due to the volatile
environment.

Outsourced human resources are likely to work harder as opposed to the internal team since
job security is their priority. In addition, they get motivation from the amount of money IBM
pays them after completing work. This increases productivity, which promotes effectiveness
within an organization (Raman & Ahmad 2013). Secondly, outsourcing is important because
it encourages specialization. In essence, the Insurance Outsourcing Services refers employees
to IBM after thoroughly scrutinizing them.

Credible candidates often display a natural aptitude in the field of work. In addition, one has
to possess academic qualifications that match the job description. After such an exercise, the
IIOS comes up with a team that specializes in the relevant department that IBM seeks.
Through specialization, the company will have the best team for each department and this
would promote effectiveness at IBM (Milberg & Winkler 2013). Such a move is
exceptionally essential for growth and brand positioning.

Risk Sharing

When employing human resources on a permanent basis, the employer has to take all the
risks associated with the procedure. Sometimes the productivity levels of employees reduce
when they have a full-term contract. In legal terms, it would be impossible to revoke such a
contract unless the case is extraordinary.