Outsourcing in IT & the challenges

Index Slide
Contents Slide No.

Introduction, Ground rules & Disclaimer 3

What is Outsourcing ? 5

Why do organizations out source? 6

What are the challenges in outsourcing? 7

What are the common mistakes done in outsourcing? 8

What are the factors that drive the outsourcing success ? 9

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Ground rules

• Mobiles must be completely switched off

• Interaction is encouraged
• questions are welcome after each slide

Disclaimer

• Contents shared in this presentation are from my practical

experience and may not define the complete boundary of
outsourcing
• Techniques, challenges etc. can vary from industry to
industry, situation to situation

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NASSCOM predicts

India’s IT and outsourcing industry is expected

to grow over 7% this fiscal year and log
revenues of $64 billion

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What is Outsourcing?

It is a method to get the requirements done through external

parties or organizations

Examples:

• Maintenance of computer hardware outsourced to a third party

• Outsourcing the job of recruiting young MBA executives

• Outsourcing of development & implementation of systems such as

Inventory Control, Financial accounting etc.

• Outsourcing of credit card application campaign & processing

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Why do organizations out source?

• Expertise or infrastructure not available within the organization

• Time to market factor

• Helps companies to concentrate on their core strengths

• Cost advantage and increase profitability

• Improved efficiency & better customer satisfaction

• For strategic reasons

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What are the challenges in outsourcing?

• Selection of the right Vendors is a time consuming & costly process

• ROI in Outsourcing takes longer period of time
• Lack of control over vendor companies’ resources
• Possibility of quality compromise by vendor companies
• Risk of vendors demanding more price when the dependency increases
• Failure of vendor companies will impact the Outsourcing companies
• Risk of divulgence of business confidentiality
• Time zone and language challenges
• Cultural gaps between the two companies

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What are the common mistakes done in outsourcing?

• Vendor selection process does not consider all factors

• Contract does not cover all situations and clauses leading to

arguments, challenges & litigation between both the parties

• Lack of clear documentation of Scope of work

• Over caution on either sides lead to loss of TRUST

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What are the factors that drive the outsourcing success ?

• Meticulous Vendor selection process

• Signing of detailed Scope of Work / Contract / NDA
• Regular project progress review with the vendors and initiating
corrective actions

• Inspection of the process followed by vendor companies

• Identifying single point of contact strengthens the relationship
• Acknowledging Vendor companies’ contribution

• Sharing incentives to vendor companies to encourage quality,

commitment and timely delivery
• Mutual understanding of statutory compliance and culture

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Questions ?
Thank You