Marketing By Outsourcing Customer Service

Published Date: 02 Nov 2017

I, Sukesh Shetty, hereby declare that the project was entitled

"Outsourcing"

In the academic year 2011-2013, the information provided in the above mentioned project is true and it is original work done by me under the guidance of Prof.Rahul Borse, and it has not been submitted to any of University before this.

Date:

Place: [Sukesh Shetty]

Contents.

Abstract

Introduction

What is outsourcing { Brief }

Evolution of OFFSHORE outsourcing

The Outsourcing History of India

Outsourcing to India

Fundamentals

The Main Strategy

Successful Outsourcing

Effects of outsourcing in Travel industry

SWOT analysis

Pros and Cons of Out sourcing in Travel industry.

News Articles about outsourcing.

Conclusion

Outsourcing and how it can help Travel Firms enhance their projects.

Abstract

With computer systems / projects and there implementations getting more complex with every day that passes , the tendering of IT & customer support responsibilities to external parties is becoming more and more attractive to the Project Managers of large organizations as well as upcoming firms. The common name for this type of operation is "Outsourcing". It is the attempt of this project to explain outsourcing, it's pro's and con's and how it can help our Travel firms to enhance developments or implementations.

Introduction

Outsourcing can be defined as a contract service agreement in which an organization hires out all or part of its IT & customer support responsibilities and sometimes sales as well to an external company.

More and more companies are leaning towards outsourcing it could be said that this may be caused by the growing complexity of IT and the changing business needs of an organization. As a result, an organization may find that it is not possible to have all its IT services supplied from within its own company. Also sometime to improve the quality of customer support, follow up leads and generate sales its required to have a good team. Given this, an Manager may decide to choose to seek assistance from an external contractor/company to supply their services the organization lacks. In addition, the business competition has set the pace for an organization to continue to strive for internal efficiency. It also needs to look for a way to transfer non-core activities or "in house" services and support activities to external specialist organizations who can deliver quality services at a lower cost.

What is Outsourcing a basis question for all and the answer is

"Outsourcing" means sharing organizational control with another organization, or a process of establishing network relations within an organizational field.

"Offshoring," on the other hand, represents a relocation of an organizational function to a foreign country, not necessarily a transformation of internal organizational control.

Offshore-outsourcing has provided many businesses with the opportunity to harvest the benefits of lower labor costs and to exploit the value of less than par foreign currencies.

Outsourcing entered the business lexicon in the 1980's and often refers to the delegation of non-core operations from internal production to an external entity specializing in the management of that operation. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of worldwide labor, capital, technology and resources.

Business segments typically outsourced include information technology, human resources, facilities and real estate management, and accounting. Many companies also outsource customer support and call center functions, manufacturing and engineering. Outsourcing is successful in increasing product quality and/or substantially lowering firm and consumer costs (e.g. increases the quality to cost ratio). Because outsourcing allows for lower costs, even if quality reduces slightly or not at all, productivity increases, which benefits the economy in aggregate.

In the last 15 to 20 years, the introduction of information technologies and telecommunications advances has expanded the types of work it is possible to undertake, while reducing costs. Concurrently, ideas of 'service' and service relationships continue to be redefined as technology becomes increasingly ubiquitous, rendering the public more receptive to mediated service interactions.

The "vast majority" of call centers in the UK have "existed for less than ten years" claims Cameron, while Michel notes that in Germany, 25% of call centers in the country were established before 1991, and 41% during what he terms the "call center boom" after 1995. A boom is perhaps an accurate term. One estimate suggests a rate of growth between 20%-25% a year in Canada, while a 1996 Data monitor report gave a figure of 40% for call center market growth in Europe, a number anticipated to hold until the turn of the century.

The most recent NASSCOM numbers place the BPO industry in 2004-05 at $ 5.2 billion in annual revenues – this is a scorching 44% rate of the growth for the industry and it is clear that many Tier 1 players have actually grown much more than that.

Outsourcing can also present advantages to non-Western states. "Developing" countries, such as China or India, benefit from the patronage of companies that outsource to them - in terms of increased wages, job prestige, education and quality of life. According to current data, the business process outsourcing (BPO) industry in India employs around 400 people every day with the people exiting from this sector being around 12% of the total workforce.

The recent Nasscom-McKinsey Report 2005 on the Indian IT industry says the addressable offshoring market of BPO can go up to $120-150 billion from the current $11.5 billion. Even in its projections of $60 billion in IT export revenues, it expects the BPO segment to contribute $ 25 billion.

The Indian ITES-BPO (IT enabled services and Business Process Outsourcing) industry continued to be a high potential, high growth segment within the country’s overall information technology and telecom industry, contributing close to 20 per cent of the IT-ITES industry’s revenues in 2004-05.

The Indian ITES-BPO market has been notching up record growth rates (often in excess of 50 per cent). During 2004-05, the industry achieved a momentum of around 44.4 per cent, with revenues touching approximately US$ 5.8 billion. Secondly, the industry has shown a Compound Annual Growth Rate (CAGR) of 56.4 per cent over the 2000-05 phase, higher than any other industry segment in India.

Amid raging controversy over outsourcing of jobs, Australia's leading bank, St George's Bank has said it is sticking to its decision to send 76 computer services jobs to India due to competition. "We are competing in an environment of very strong major bank players. If we don't remain competitive, St George won't exist," bank's chief executive Gail Kelly told.

Criticisms of outsourcing from both management and consumers often focus on a central question: is the performance or quality of the outsourced service, or new organization of labor, on par with the expected standards of management and consumers - i.e. how does outsourcing a service effect its quality as opposed to "in-house" work.

Outsourcing became a popular political issue during the 2004 U.S. presidential election. The political debate centered on outsourcing's consequences for the domestic workforce. Democratic U.S. presidential candidate John Kerry criticized firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of U.S. taxes during his 2004 campaign, calling such firms "Benedict Arnold corporations".

A Zogby International poll reports that 71% of American voters believe that "outsourcing jobs overseas" hurts the economy and another 62% believe that the U.S. government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource.

Outsourcing appears to threaten the livelihood of domestic workforce and, in the United States, the American Dream. This is especially true for high-tech workers who were promised the "jobs of tomorrow"- a phrase Bill Clinton iterated in 1994 to justify his conservative position on the North American Free Trade Agreement (NAFTA). Outsourcing appears to work contrary to the claim that "free trade" will create the "jobs of tomorrow" in America when high-tech or high paying white collar jobs are transferred to or created in foreign countries.

There are also some security issues concerning companies giving outside access to sensitive customer information. In April of 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when Indian call center workers in Pune, India, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names.

Outright fraud is also a concern. In 2005, Intel discovered and fired 250 Indian employees after they faked their expense reports. The firings followed from Intel's internal Business Practice Excellence program of expenses claims. The report concluded that fraudulent practices such as "faking bills to claim your allowances like conveyance [and] drivers’ salaries" were some common malpractices in India.

Economist Thomas Sowell from the University of Chicago said "anything that increases economic efficiency--whether by outsourcing or a hundred other things--is likely to cost somebody's job. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes."

Walter Williams, another economist, said "we could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past--jobs such as elevator operator, TV repairman and coal deliveryman. ‘Creative destruction’ is a discovery process where we find ways to produce goods and services more cheaply. That in turn makes us all richer." Nationally, 70,000 computer programmers lost their jobs between 1999 and 2003, but more than 115,000 computer software engineers found higher-paying jobs during that same period.

Divakar Kaza, president, global HR, HTMT says, the industry has now reached a strategic inflexion point where the rules of engagement will change as the industry matures. Having established brand India in this sector, companies need to move up the value chain quickly, he adds. For the people-driven business, the biggest talent pool for the BPO industry has been the college graduates though this base has been widened. The industry has been able attract people with professional qualifications like chartered accountants and MBAs and there has been a broad change in perception among colleges, students and parents about BPOs.

Evolution of OFFSHORE outsourcing

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1st Generation: Offshore services originated as a tactical solution for importing high-quality, low-cost services in a staff augmentation mode. Typically, offshore professionals were brought onsite with temporary visas and were paid at lower hourly rates. In most cases, this approach was limited to application maintenance or development projects that were already highly defined. However, the potential for labor savings was limited because of the need to import talent.

2nd Generation: The pure "Offshore Production" phase, second-generation offshore outsourcers established small regional marketing offices near major clients, while sending work offshore. Although more cost-effective than 1st generation offshore, this approach was suitable for less complex engagements with well defined functional specifications and that did not require extensive project management.

3rd Generation: The "Onsite/Offshore" model emerged, adding local project management and liaison staff to improve day-to-day coordination and problem resolution with projects sent offshore. With onsite project management, projects of slightly more complexity that required frequent change could be handled.

4th Generation: The "Seamless Integration" phase, 4th Generation Offshore Outsourcing provides the best of both worlds: the low-cost of offshore development coupled with critical management presence with which customers can interact with on a regular basis, forming meaningful partnerships that allow the customer to focus on its business, rather than the technologies necessary to support it. This approach to outsourcing is suitable for projects of high complexity large scale transformational outsourcing. The 4th generation offshore outsourcing provider is the ideal partner for helping enterprises undergo profound business transformation.

The Outsourcing History of India

{http://www.outsource2india.com/why_india/articles/outsourcing_history.asp }

The idea of outsourcing is not new. It started way back in the 1700s when manufacturers started shifting the manufacture of goods to countries with cheaper labor during the Industrial Revolution, following the precepts of Adam Smith in his book 'The Wealth of Nations'. The history of outsourcing to India is an interesting story. Even after over a decade of competitive global outsourcing, most of it still goes to India. Reaching this pinnacle in outsourcing has been a long journey. As land, sea, and later, air routes developed between the 15th and 21st centuries, more nations started to outsource trade to other nations, eventually leading to outsourcing to India and other nations.

Why do companies actually outsource? In earlier times, cost and headcount reductions were the most common reasons to outsource. Today, the drivers are often more strategic, such as how a company can best utilize its own core competencies. Though the outsourcing of manufacturing is an old story, outsourcing to services is a relatively new phenomenon. Services outsourcing to India started in the 1980s and rapidly accelerated in the '90s. In today's world where information technology has become critical to business, the meaning of outsourcing has undergone a drastic change over the years. Companies have started focusing on their core competencies and outsourcing many non-core functions, for which they had no competence internally.

Key Factors:

Although the IT industry in India has existed since the early 1980s, it was the early '90s which saw the emergence of outsourcing. First, some global airlines began outsourcing their back office work to India—and then IT companies followed. Some of the earliest players in the Indian outsourcing market were Texas Instruments, American Express, Swissair, British Airways and GE, who started captive units in India. Over the years, the industry has built robust processes to offer world class IT software and technology-related services.

India offers a unique combination of attributes that have established it as the preferred destination for IT-BPO. Advances in technology and communication have allowed transnational companies to rapidly globalize at a very low cost. The cost of managing workers in a distant location had fallen drastically, and the need to outsource became stronger. Significantly, India also began efforts to open up its economy to the world. Since the onset of globalization in the early 1990s, successive governments have pursued programs of economic reform committed to liberalization and privatization. The government started easing restrictions and liberalizing the economy, which has helped the country see rapid economic growth.

Developments in telephony, fiber optics and satellite communications made Internet-based communication and transfer of data possible, paving the path for outsourcing to India. The telecom industry in India used to be a government-controlled monopoly and the market was small. By 1999, the government introduced policies which played a key role in reshaping the structure and size of the telecom Industry, allowing commercial entities to participate in almost every industry segment. The new telecom policy brought in further changes with the introduction of IP telephony and ended the state monopoly on international calling facilities. The government's liberalized investment policies have resulted in several foreign companies entering Indian markets, which has been a major contributor to the growth of the Indian economy.

In addition to the central government's intervention, state governments are also competing with each other to offer more favorable business environments in order to attract IT/ITES companies to set up development units in their states. This kind of competition is helping the industry grow at an astronomical rate.

Indian companies are enhancing their global service delivery capabilities through a combination of greenfield initiatives, cross-border mergers and acquisitions, partnerships and alliances with local players. Global software giants like Microsoft, Oracle, SAP and many others have established captive development centers in India over the years. Indian authorities have made efforts to further strengthen the information security environment in the country, and special initiatives have been taken to enhance the legal framework. Many companies in India have already aligned their internal processes and practices to international standards such as ISO, CMM, Six Sigma, etc. which have helped establish India as a credible outsourcing destination.

The IT & BPO sector has been a key beneficiary in India's growth, with the cost of international connectivity declining rapidly and quality of service improving significantly. India's National Association of Software and Service Companies (NASSCOM) has played a critical role in outsourcing by acting as a coordinating body for the industry. It conducts surveys and conferences which help in the dissemination of knowledge and research in the outsourcing industry. As per NASSCOM, "While India's low-cost talent pool has helped its businesses grow, global incumbents have also recognized India's inherent advantage and have mastered this capability by off-shoring more work out of India." India's competitive advantage lies in its ability to provide huge cost savings and thus enabling productivity gains.

According to NASSCOM, the major reasons behind India's success in ITES/ BPO industry are:

Abundant, skilled, English-speaking manpower, which is being harnessed even by ITES hubs such as Singapore and Ireland.

High-end telecom facilities and infrastructure which are on par with global standards.

Better focus on maintaining quality and performance standards.

Fast turnaround times, and the ability to offer 24x7 services based on the country's unique geographic locations that allow for leveraging time zone differences.

A friendly tax structure, which places the ITES/BPO industry on par with IT services companies.

Proactive and positive policy environment which encourages ITES/BPO investments and simplifies rules and procedures.

India has become the largest player in offshore delivery with levels of work delivered that are amongst the highest across several verticals. The supply-side elasticity of skilled English-speaking manpower across technology and non-technology spaces is unmatched. The success of the industry has resulted in Indian companies looking at acquisition targets worldwide, and the Indian service provider community is being viewed as a "strategic business partner" and not just an IT services vendor.

Over the years, BPO has become the second largest segment in Indian IT/ ITES industry and also the fastest growing. The scope of process outsourcing has widened over the past few years to also include KPO (Knowledge Process Outsourcing) operations. Customer Care is the largest contributor in the BPO segments. The last few years have witnessed the industry evolve from executing projects at the lowest end of the value chain, to one where Indian players are aggressively bidding for and winning large-scale turnaround projects. At the same time, the Small and Medium Providers (SMPs) in this sector are holding their own during these difficult times. The SMPs in India are integral to the growth engine of the industry in particular, and the Indian economy in general. As per studies by NASSCOM:

The compounded annual growth rate (CAGR) of the industry has been over 25% in the last five years. Over these years, four main components have formed the industry, IT services, BPO, Engineering Services and Hardware.

Banking and Financial Services, Telecom, Manufacturing are among the top 4 verticals for both export and domestic market.

While hardware dominates the domestic market, IT services tops in the overall industry.

Today, Indian companies offer a wide variety of outsourced services ranging from medical transcription, customer care, medical billing services, database marketing to Web sales/ marketing, accounting, tax processing, transaction document management, telesales/ telemarketing, HR hiring and biotech research.

Outsourcing to India has been a satisfactory and profitable experience for most companies around the world. Indian outsourcing vendors have continuously adapted to internal and external challenges and the credit for this goes to Indian outsourcing companies and the successive enabling governments. Outsourcing in India has faced adversities due to the state of the world economy and the ongoing recession, but it is surely here to stay.

Outsource to O2I

If you want cost-effective services without compromising on quality, look no further than Outsource2india. We have skilled, experienced and well-trained professionals who will provide you world class services. When you outsource to O2I, you can be assured of a quick turnaround time. Outsource you requirements to O2I and benefit from our expert, efficient and technology-driven services. Contact us with your outsourcing requirements.

Outsourcing to India

{ http://www.outsource2india.com/why_india/article_index.asp }

Why Outsource to India?

If Software Engineering Institute's 'Capability Maturity Model Level 5' is the highest quality certification in the software industry, then India's the place to be. With 65% of the world's CMM Level 5 companies and one of the world's largest pool of scientific and technical talent, India is a logical choice for outsourcing.

What can be outsourced to India?

At a glance see IT related outsourcing options to India. This list, although not extensive, will entice you with the overwhelming potential and possibilities of outsourcing. Click here and begin to explore a new way of doing business.

Job Outsourcing to India

With the advent of globalization, more and more jobs are being outsourced to India. The outsourcing trend has brought with it a vast number of opportunities to India. So why are people outsourcing jobs to India? Let's find out why job outsourcing has become so popular.

India Offers High-Quality Services

Outsourcing to India is now more about high quality rather than cost. Indian companies are fast scaling up to match or surpass international quality standards and are ensuring that they stay ahead through stable quality systems and continuous quality improvement.

Outsourcing BPO Services to India

Outsourcing BPO Services to India offers benefits not only in terms of cost reduction, but also in terms of increased productivity and quality. Companies along with their customers benefit since they can access some of the best talent and expertise in the industry at lower rates.

BPOs in India

Business process outsourcing or BPO in India has evolved from its early 'sweat-shop' image to the status of a strategic differentiator in the global marketplace. BPO is the contracting of a business task to a third party service provider. Factors responsible for outsourcing success are: quality processes, scalability, integration of global markets and seamless global delivery of work across borders through the internet.

The Investment Hub of India

Bangalore possesses much of the attraction of other cities in India for the BPO sector; talented resources, good educational institutions, a large English speaking population, and technological prowess. However, it is a proactive state government that makes constant efforts to facilitate new investments, which gives Bangalore an edge over other Indian cities.

High Rise Bangalore

Bangalore has good infrastructure, with large floor space and great telecom facilities. With a huge number of IT/ITES companies, R&D and product development facilities, and call centers mushrooming the demand for commercial space has risen drastically. These companies want the best space, with high ceiling heights, good broadband connectivity and areas of around 40,000 to 50,000 square feet.

Intellectual Property Outsourcing

Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic works, symbols, names, images and designs used in commerce. IP plays an important role in an increasingly broad range of areas, ranging from the internet to healthcare to nearly all aspects of science and technology, law, literature and the arts.

Business Opportunities in India

Are you looking at reducing your software development costs? One attractive way would be to relocate some of the development work to countries like India. While there are tremendous opportunities in these countries, a clearer understanding of the tax and legal formalities could mean the difference between smooth outsourcing of work and a confusing tangle of delays and cost overruns. Here's an article that discusses these issues in depth, without the confusing legalese.

The Legal Aspects of Outsourcing to India

If you are considering outsourcing to India, but need some information on the legal issues in offshore outsourcing or are worried about whether your contract will be honored by the Indian Legal System, read on.

Fundamentals

In deciding whether to use outsourcing or not, the main objective of outsourcing is based on the price of delivery of services by an external contractor/company. Although price of delivery is a primary factor for outsourcing, other issues should be considered e.g. price should be measured against the overall package offered by the external contractor/company. Briefly if it's a good competitive price in relation

to the services rendered by the company and in respect to their skills/competency and experience, and timely delivery. The organization also needs to consider outsourcing in light of its long term strategic directions and its information needs.

Competition is an another area to be carefully considered. Competition opens up opportunity for all potential suppliers to conduct business with the organization. Through the competitive process, it allows organizations/Managers to derive the best outcome. From the open and effective competition, the organization is then able to judge soundly in determining the best strategy after it has taken into account of the competition and value for money principle.

Managers can go through lengthy procedures to minimize problems with outsourcing, but still things can go wrong and intended objectives may not get achieved. To overcome such mistakes, it may be prudent to look at other companies that have undertaken outsourcing and learn from their successes and mistakes.

Listed below are some of the major issues to be considered when using outsourcing:

· An Manager that undertakes outsourcing must be able to clearly identify its long term strategic directions and long term information needs.

· Organization must be able to clearly define its business objectives.

· To avoid unnecessary friction between the organization and the external service provider, it would be prudent to incorporate an "extraordinary events" clause into any contract entered into. This clause should cover any extraordinary changes in circumstance that should occur. This also allows a lot of flexibility between the two parties.

· The manager should identify all the external and internal stakeholders and the impact that the outsourcing may have on stakeholders.

· Learn from other companies, use their mistakes and successes to avoid duplication and waste of manpower.

· The manager should communicate regularly with anyone in the organization who is affected by outsourcing, even if the affect is very small.

· The manager should make sure that the external service provider should know exactly what is expected of them e.g. the exact services required.

· The manager should allow adequate time and the correct resources to the problem at hand, this is to ensure the best possible outcome from the service arrangement.

· The manager should assign skilled staff to manage the external contractor and to monitor closely the external contractor performance.

· The manager should monitor and assess the contractor to ensure quality of the service not just price of the delivery of services.

The Main Strategy

In an organization, the IT infrastructure components are comprised of a number of technical and service areas. Before going through any outsourcing decision process, the organization needs first to assess its sourcing across the entire IT infrastructure. Once this is done, the organization can then determine the best sourcing strategy against a number of perspectives.

In order to determine the optimum sourcing strategy, an organization needs to look at a number of perspectives or alternatives and then balance these perspectives with the benefits and risks of outsourcing. With this information, an organization can derive a more structured methodology for a balanced view of the IT infrastructure, service elements and its components.

It can be stated that there is no one approach to outsourcing. However, in practice there are three common methods used by the practitioners. They include:

1 Outsourcing a significant proportion of the IT services, customer support, sales and technical areas. This approach has a lower co-ordination cost and also has a greater organizational impact;

2 Assessing each IT service, customer support, sales and technical area independently. A number of vendors are used to match the needs of each outsourcing event. This approach selects the best vendor and deal for each outsourcing arrangement. However, it involves higher internal costs and synergy problem;

3 Selecting a prime contractor. The prime contractor can select and manage all other vendors. This approach depends on the importance of learning curve and therefore, it takes longer.

As part of the determination of outsourcing strategy, it is useful for the organization to incorporate any experience derived from other organizations that have outsourced and other forms of outsourcing that the organization has undertaken. The organization should also perform an initial investigation on the potential vendors background. Furthermore, the organization should examine different kinds of outsourcing forms that the vendors are able to provide.

The organization must identify all the internal and external stakeholders and the impact that outsourcing may have on them and their objectives. The internal stakeholders include IT staff, customer support & sales team, users and management and, the external stakeholders include unions, customers, and existing suppliers.

The manager should also undertake cost benefit analysis of all internal costs and external provisions. This provision include capital investment, ongoing expenses and the commitment of time and resources. Once a cost baseline is developed, an organization can come up with a more objective cost analysis. It can then assess the related components of the vendor's

proposal against this cost benefit analysis before making any decision regarding the outsourcing.

Successful Outsourcing

For a firm to successfully outsource its customer support & sales functions, there are a number of factors that need to be addressed.

An organization that has outsourced its customer support & sales functions to an external contractor, should not abdicate itself from the responsibility from the activity that it has outsourced. In other words, there is still a need for the organization to retain overall control of its services being outsourced. In addition, the organization needs to regularly monitor the external contractor to ensure that they continue to deliver quality service and to perform at the required standard as agreed in the contract arrangement. To be able to do this, the organization must ensure that it can maintain sufficient technically competent "in house" staff to oversee the contract service agreement.

Before an organization outsources its customer support & sales functions, it is very important that it prepares a sound full cost estimate for all existing internal computer systems & infrastructure so that it can determine whether the outsourcing is cost effective. Failure to do so can be critical.

For any successful outsourcing, a good solid contract is essential. The contract should also allow for flexibility as it is difficult, in the life cycle of the contract, to predict every circumstance or cover every eventuality. Successful outsourcing should be based on partnership between the organization and the external contractor.

Outsourcing an organization's customer support & sales functions without proper consultation with employees can cause a lots of stress among staff and reduce their morale. The result may be a loss of some key technical and specialist staff from the organization. A more open and timely communication with employees can minimize this impact and uphold the staff morale. Organization can allay the fears by outlining career options and opportunities for its staff within and outside the organization and also by explaining the benefits of outsourcing to those affected employees.

The Economics of Outsourcing.

There are many reasons a company may choose to outsource its customer support & sales function. These couple of paragraphs address the two main reasons for this action

1 The conception that outsourcing is cheaper

2 The expertise required best and smooth customer support & quality sales does not exist within the company.

In the past, it was difficult to compare the cost of outsourcing a customer support & sales process against the cost of in - house process, mainly because there was no functional sizing metric agreed upon prior to the start of the contract. In all sophisticated industries cost per unit (or average cost) is an important consideration, where average cost is total cost divided by total output. The same concept can be applied to customer support & sales using function points. Total in house process cost divided by total function points is an average cost calculation. Once average cost is determined, all prospective developers, in-house and outsource, can be compared on an equal basis.

Just as important is the ability to adequately evaluate the delivered product, considering several factors: size, quality, time to market, and so on. Using functional metrics total delivered function points can be contractually agreed upon prior to the start of the contract, assuming the company contracting the customer support and sales has clearly defined the final product. This is a dramatic change in the way customer support and sales projects historically are managed. Any change in the number of total delivered function points once the project begins will impact the average cost calculation. Changes, additions, and even deletions to the customer support and sales become more expensive per unit as you move through the development life cycle. Since the consumer of the custom built customer support and sales system wants to minimize unit cost, it is therefore in their best interest to sufficiently define requirements prior to the start of the project.

The ability to compare cycle time, or time to production, is also important. Time to production is defined as total number of function points delivered divided by elapsed calendar time. The least expensive outsourcer or contractor also may be the one whose delivery date is the latest out. The buyer of the customer support and sales process must decide if quicker time to production is worth the extra expense.

The number of acceptable defects delivered per unit of size is another important evaluation metric; with higher quality comes higher process running costs. But delivering proper customer support and sales support with numerous embedded defects will be expensive to maintain and will cost more in the long run.

The considerations of outsourcing change dramatically when you view the relationship from the perspective of the outsourcing firm.

It is important to the outsourcing firm that the average unit cost for customer support and sales be kept to a minimum. Fixed-price contracts create an environment that pushes average costs lower for subsequent projects.

Outsourcing firms have a great incentive to maintain a customer support and sales: reuse of components in future projects. If this library is thoroughly tested, insuring that it is nearly defect free, and documented so it can be easily understood, it can be used with confidence to lower average costs over time.

Additionally, outsourcing firms have a great incentive to keep their staffs trained in the latest software languages, tools, products and techniques. As more outsourcing projects are undertaken, the responsibility to keep staff knowledgeable and up-to-date transfers from the in-house development team to the outsourcing firm. The outsourcing firm assumes the risk of investing in the technical staff - if their people are not trained on the latest software technologies, they cannot remain competitive with other outsourcing firms who have staffs with state-of-the-art skills. They willingly assume the risk with the expectation that these training initiatives will lower future average costs.

Unfortunately, it is still the norm in the customer support and sales process arena, and in outsourcing cases in particular, for an organization to be ignorant of the average size and average cost of a customer support and sales project. All other sophisticated industries calculate and monitor their per unit average cost. As the customer support and sales industry continues to mature, not only will it be common practice to know average costs in dollars per function point, it will be required.

" How does outsourcing effect Travel Industry ? "

Travel industry is an industry which has achieved a good amount of growth. According to the World Travel and Tourism Council calculated that tourism generated $121 billion or 6.4% of the nation’s GDP { Gross Domestic product } in 2011. Also the outbound tourism { Travels going outside country } has increased so as the companies planning there tour. There N number of small travel firms being established these days. Few even achieve the goal of hitting their target audience. Most of the service industries { not only travel firms } grow on the basis of 80:20 principal.

80:20 principal is basically retaining their 80% of the customers and hitting on the 20% of new customers. This 80% helps them achieve their targets and also sometimes achieve MOS { Margin of Safety }. And the rest 20% helps in achieving the estimated profit statistics.

Now how does OS {outsourcing} effect this system or why OS would help this system ?

The answer is OS gives a good customer service support to any travel firm which helps them to work on their 80% also the upcoming travel firms think upon investing in infrastructure and giving up that time to customer support OS helps them doing that. Also OS can bring a drastic change to their up selling and boosts up their sales. Even OS sales is also a good idea cause the travel firm need not spend a lot on the dedicated team instead they can just OS their process.

In this way any small scale travel firm can OS their process to get a good stability in the market and also generate good amount of numbers { Profit }

Outsourcing SWOT Analysis to India

 

Benefits of O2I's KPO Services

Highly qualified team holding Ph.D. or Masters degrees

Strong Scientific, Technical and Medical (STM) domain expertise

Life Sciences and Market Research focus

Everyday your business is faced with new challenges, strengths, weaknesses, opportunities and threats. The good thing is, what happens to be a threat for your competitor could turn into a golden opportunity for you. All you need to do is keep your eyes open and take the right action!

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

What do people in your market see as your strengths?

What advantages does your company have?

What do you do better than your competitors?

What unique or lowest-cost resources do you have access to?

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

What should you avoid?

What could you improve?

What are people in your market likely to see as weaknesses?

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

Where are the good opportunities your company could leverage?

What are the interesting and promising trends you are aware of?

Opportunities could come your way through:

Changes in the technology you use

Changes in the market

Changes in government policies that are relevant to your business

Changes in your target audience such as lifestyle

Events in your industry

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:

What obstacles do you face?

What is your competition doing?

Is changing technology threatening your position?

Do you have bad debt or cash-flow problems?

Could any of your weaknesses seriously threaten your business?

Are the required specifications for your job, products or services changing?

Such analysis will often throw light on the future course of action, both in terms of putting problems into perspective and pointing out what needs to be done.

Strengths and Weaknesses are internal and Opportunities and Threats relate to external factors.

O2I can conduct SWOT analysis for your competitors as well. This will enable you to pinpoint the areas where you can successfully compete with them.

Pros and Cons Outsourcing in Travel firm

Pros :

This would reduce the cost to the company

This would increase the number leads per day

This would increase the quality of customer support

Help retaining clients

Would also increase the sales { If a sales process }

Cons :

We need a dedicated team for the best service and not always possible that each and every team member would be equally skillful.

SLA’s cause cost reduction while verification if the team working on the process is not proper.

Employees don’t be stable, this seen the most in outsourcing firms.

Initial investment is high and the breakeven is of about two to three years.

Also due to data protect act testimonials and leads cannot be exchanged which would be an factor effecting to get sales process.

Popular News Articles About Outsourcing

{ http://articles.economictimes.indiatimes.com/keyword/outsourcing }

NEWS

RIL, HFCL tie up for 4G launch

May 21, 2012 | Deepali Gupta , ET Bureau

MUMBAI: Reliance Industries Ltd (RIL) plans to roll out its 4G network in partnership with Himachal Futuristic Communications Ltd (HFCL), the group from which it acquired pan-India airwaves for high-speed internet and data services in May 2010. According to people familiar with the development, Reliance-owned Infotel Broadband will focus on key aspects of the network and monitor the rollout, but will leave ground-level execution and management to HFCL, which has prior experience of similar...

NEWS

Barack Obama won't rock the outsourcing boat, hopes Anand Sharma

February 13, 2013 | PTI

MUMBAI: Commerce and Industry Minister Anand Sharma today expressed hope the US administration's proposal to end the tax incentives on outsourcing companies will not impact the growing bilateral trade relations between the two nations. "We will have to look at the details as to what is being proposed. We hope that nothing will be done by the US government which will adversely impact the ongoing partnership, particularly in the technology sector," Sharma told the Nasscom...

NEWS

TCS, Infosys, Wipro struggle to keep project managers

June 30, 2010 | Devina Sengupta & Pankaj Mishra , ET Bureau

BANGALORE: Rising attrition among project managers with experience of between three and eight years, who handle critical delivery teams for top customers, is proving to be a big worry for major IT firms like Tata Consultancy Services (TCS), Infosys and Wipro that are scrambling to cope with renewed demand for offshore outsourcing. Until a few months ago, technology firms were busy offering salary hikes and other incentives to software engineers to retain them as...

NEWS

Cantor Fitzgerald to set up backoffice operations

September 7, 2003 | Sangeeta Kulkarni , TNN

MUMBAI: Joining the likes of investment banking firms such as JP Morgan, Morgan Stanley and Merrill Lynch, US-based financial products and services provider Cantor Fitzgerald & Co has decided to set up a back office captive outfit in the country. Cantor's captive operations will carry out institutional and equity market research. The firm has already established small operations with close to 50 people in Mumbai. Estimates related to the...

NEWS

RCOM inks Rs 5.3k-crore, 8-year outsourcing deal with Ericsson

February 12, 2013 | ET Bureau

NEW DELHI: Telecom operator Reliance Communications has outsourced its network operations and management in northern and western India to the Swedish firm Ericsson in an eight-year contract for about Rs 5,385 crore. The company on Monday said that under the $1-billion contract, one lakh km of fibre and mobile infrastructure will be set up in its 11 telecom circles, including Delhi and Mumbai, and that Rs 5,000 of its employees would join Ericsson. Ericsson will...

NEWS

Air India signs Rs 535 crore outsourcing deal with Sutherland Global

February 11, 2013 | Akanksha Prasad & N Shivapriya , ET Bureau

BANGALORE/MUMBAI: Government-owned airline Air India has, after much hemming and hawing, found a business process outsourcing partner in Sutherland Global Services even as many other potential bidders avoided the five-year contract because the terms were exacting. Air India postponed its tender by six months to December-end and introduced three amendments to the first draft around November before sealing the about $100 million (Rs 535 crore) deal...

India Inc optimistic after Obama win, but outsourcing concerns weigh

{http://profit.ndtv.com/news/corporates/article-india-inc-optimistic-after-obama-win-but-outsourcing-concerns-weigh-313011}

India Inc. has expressed happiness over the re-election of President Barack Obama despite his hard line stand against outsourcing. India's $100 billion IT services sector is dependent on the U.S. and Europe for over 80 per cent of revenues.

Phaneesh Murthy, who heads the Information Technology (IT) firm iGATE on Wednesday said the re-election of President Barack Obama is not the best news for the Indian IT industry.

Mr Murthy, who has earlier served as a director of Infosys, India's second biggest IT services exporter, said, "Congratulations to the President for pulling off a hard fought victory. Not the best news for India or the IT outsourcing industry". Mr Murthy is based in the U.S.

However, N Chandrasekaran, CEO of TCS, India's biggest software services outsourcer said he does not agree that President Obama's regime is anti-outsourcing.

"We would like to congratulate President Obama for winning a second term in office. Now the focus will be on driving economic growth, which will lead to increased prosperity and greater job creation in the US, as well as act as a catalyst for growth across the world.

Technology will play a strong role in driving the next phase of growth and Indian IT companies will have opportunity to play a significant role to partner with US companies to achieve this. This will lead to further job creation in the US and other parts of the world," Mr Chandrasekaran said in a statement.

Rahul Bajaj, chairman of Bajaj Auto said outsourcing could be a sticky issue, but overall it is a good thing that President Obama has been re-elected.

President Obama had adopted a tough line against outsourcing of jobs in the run-up to these elections, and had often said that he wanted to give tax breaks to companies that are investing in the United States. In his attacks on his opponent Mitt Romney, former Massachusetts governor, he accused him of outsourcing American jobs to countries like India and China.

Adi Godrej, chairman of the Godrej group said President Obama's presidency is a good development for India.

"Between two large economies there will be issues and concerns. Outsourcing is also a concern and I hope it will be addressed soon," Mr Godrej said on the sidelines of the World Economic Forum on India here.

Som Mittal, chairman of IT lobby NASSCOM said Indian industry is very dependent on the U.S. economy doing well. Only when economic recovery happens will the jobs come back, he added.

BPO industry veteran and former CEO of Genpact Pramod Bhasin told PTI that the issue of outsourcing was more than a plain election rhetoric.

"I think there will be greater implications as he (Obama) focusses on issues like unemployment. I just hope he remains true to free trade and all the other things that he talks about so well," he said.

United States Among Top Locations for "Offshore" Work, According to A.T. Kearney's Annual Global Services Location Index

{ Click on below attachment, the file would open in your current browser }

U.S. ranks 11th among 40 countries based on lower-cost cities, with San Antonio as proxy

India, China and Southeast Asia continue to dominate; Middle East and Africa represent "next frontier"

WASHINGTON (November 22, 2005)—While India, China and Southeast Asia continue to dominate A.T. Kearney's annual ranking of the most attractive locations for "offshoring" of service activities such as IT, business processes and call centers, the United States ranks surprisingly well in a new version of the index released today.

For 2005, the global management consulting firm added four lower-cost cities in the United States, United Kingdom, Germany and France to determine how they compare to more traditional offshore locations across the 40 measurements analyzed to create the Global Services Location Index (previously known as the Offshore Location Attractiveness Index). The U.S., represented by San Antonio, ranked 11th out of the 40 countries evaluated.

Additional findings from this year's Index include:

India remains the best offshore location by a wide margin, although wage inflation and the emergence of lower-cost countries decreased its overall lead.

Improved infrastructure and relevant people skills have increased the attractiveness of China as a low-cost option for servicing Asian markets.

Thailand jumped from 13th to 6th in this year's Index and Southeast Asian countries now make up four of the top six locations on the Index.

Offshore attractiveness in Europe continues to migrate eastward as Bulgaria, Slovakia and Romania all enter the Index for the first time.

The Middle East and Africa appear to be the next frontier in offshoring as countries such as Egypt, Jordan, United Arab Emirates and Ghana perform well.

Where Developed Countries Rank

"In previous years, clients kept asking us where lower-cost cities and regions in the U.S. and Europe would stand if they were included in the Index," said Simon Bell, director of A.T. Kearney's Global Business Policy Council. "So we collected the necessary data and, as we suspected, the U.S. in particular scored very well in the Index."

Despite higher costs, the U.S. benefits from the breadth and depth of its skill-base, strong infrastructure and generally positive business environment. The U.K. regions (as represented by Belfast) do not perform quite as well (ranked 28th out of 40), but still match or surpass better-known offshore locales like the Republic of Ireland and South Africa. Germany (represented by Leipzig) and France (represented by Marseille) placed 31st and 35th, respectively, largely due to higher costs and weaker business environments, but still rank among the best locations for people skills and infrastructure quality.

"The performance of the four developed countries is not surprising since mature markets still offer by far the best combination of skill levels, relevant experience, infrastructure and business environment," said Paul Laudicina, managing director of the Global Business Policy Council, the A.T. Kearney sponsor of this research. "The standard Index gives cost factors a 40 percent weighting, vs. 30 percent each for People Skills and Business Environment. If cost savings are given a higher weighting, then North American and West European locations drop down the rankings.

"This strength of developed country service sectors, despite all the hyperbole surrounding the offshoring debate, is reflected in their trade balances. It is worth remembering, for example, that the UK operates the world's largest trade surplus in business and IT services, and the U.S. exports a larger volume of business and IT services than any other country, offsetting more than 10 percent of the total U.S. deficit in manufactured goods."

Highlights of the 2005 Global Services Location Index

Beyond the interest in the relative rankings of these "on-shore" locations, the Index remains dominated by lower-cost countries. The complete results can be viewed at www.atkearney.com.

India and China: still dominating

India still leads by a wide margin. The gap between India and the second-ranked country, China, is larger than the gap between the next nine countries combined. Nevertheless, India's lead has shrunk slightly compared to 2004. This is mainly due to a slight reduction in India's financial attractiveness, the result of wage inflation in India and the emergence of new even lower-cost contenders such as Ghana and Vietnam.

China maintains its second place ranking and partially closes the gap with India, thanks largely to continued improvement in its infrastructure quality and the availability of relevant people skills. For example, the number of development centers in China with CMM or CMMI certifications (an industry standard for rating the process-quality of IT development centers) showed the largest increase of any country in the Index, jumping from 108 in 2004 to more than 277 in 2005. For a growing number of Asian and Western multinationals, China remains the best choice for serving their growing operations throughout the East Asia region - the logical location for IT and back-office support and call centers for China itself, but also a low-cost option for servicing established markets in Japan, Korea, Taiwan, Hong Kong and Singapore.

ASEAN: still rising

As a region, Southeast Asia is the biggest winner in this year's Index. Malaysia maintains its 3rd position Singapore stays at 5th, the Philippines rises from 6th to 4th, Thailand jumps from 13th to 6th, and Indonesia leaps into the Index at 13th. Even Vietnam, at 26th in this year's Index, sees its ranking rise from 20th to 16th position among the original 25 countries included in both the 2004 and 2005 Indices.

In Malaysia and Singapore, government promotion policies continue to pay off. Given its high-wage levels, Singapore has deliberately positioned itself as a safe location for sensitive high-end activities, with a particular emphasis on business continuity, IP protection and data privacy. Malaysia has augmented continued investment in world-class infrastructure along the Multimedia Super-Corridor, with further incentives for corporations choosing to locate in Malaysia and additional policies to open up the labor pool and deepen English language and technical skills throughout the population.

The Philippines, despite continuing political instability and infrastructure weaknesses, continues to benefit from the global exposure and English language skills of its workforce. Thailand enjoys the biggest rise in this year's Index. This seems to be due largely to improvements in educational outputs, plus some improvements in infrastructure quality and the overall business environment. While still challenged by weak English-language capabilities, Thailand has the potential to emerge as key low-cost challenger to the Philippines in South East Asia.

At 13th, Indonesia is the third-highest new entrant in this year's Index, benefiting from competitive wages, rent and electricity costs, a relatively low tax burden and a very large workforce. However, weaknesses in the business environment, education quality, and language skills continue to be a concern. While Vietnam ranks low in the Index compared to the other ASEAN participants (due largely to its weak infrastructure and business environment ratings), it is still attracting attention both as an IT-development location for US-based firms and as a low-cost alternate to China for Asian language back-office and call-center operations.

Central and Eastern Europe: ever eastward

Dynamics in Central and Eastern Europe are instructive. While the more established offshore locations included in the previous years' Indices (the Czech Republic, Hungary and Poland) slipped slightly in the rankings, several newer contenders from the region made strong debuts in the Index.

Despite continuing improvements in people skills, infrastructure and business environment, the Czech Republic slipped from 4th to 7th position, largely because of the rise of Thailand and the Philippines, but also because of increasing wages and other costs in the Czech Republic. Poland and Hungary also slipped from 10th and 11th to 18th and 19th, respectively, for similar reasons. Russia actually improved its position among the original 25 countries (from 21st to 17th), but dropped in the overall rankings to 27th, due to rising wages. Moreover, despite improvements, Russia still ranked 39th out of 40 on business environment metrics.

At the same time, strong performances by three new entrants in the Index (Bulgaria at 15th, Slovakia at 16th and Romania at 24th) reflect what many on the ground have observed - as costs in the most advanced Central European countries converge toward EU-levels, companies are moving farther East in their search for high-skill, low-cost solutions.

Latin America: improving, but still challenged by new contenders

Latin America presents a similar story. While Chile improves its ranking by one position, rising from 9th to 8th, Brazil, Mexico, Costa Rica and Argentina all drop in the rankings, largely due to the rise of other countries. Brazil actually maintains the same score as in 2004, but drops from 7th to 10th place, as it is overtaken by Thailand, Chile and Canada. Brazil continues to score well on people skills as graduation and certification rates rise, but its financial attractiveness suffers from the entry into the Index of new lower-cost countries and its business environment continues to be disadvantaged by the relative inflexibility of its labor laws. Mexico and Costa Rica both improve their rankings (from 14th to 11th for Mexico and from 16th to 14th for Costa Rica) and Argentina holds steady at 15th among the original 25 countries, but they all drop in the overall rankings (to 17th, 21st and 23rd respectively), largely because of new Eastern European and Middle Eastern entrants.

Middle East and Africa: the next frontier

Perhaps the biggest surprise in this year's index is the strong performance by several countries in the Middle East and Africa - Egypt jumps into the Index at 12th, Jordan at 14th, the United Arab Emirates at 20th, Ghana at 22nd and Tunisia at 30th.

"At first, executives are surprised by these results, given the negative images associated with these regions, but upon closer inspection, the advantages become apparent," said Johan Gott, manager of research for this year's Index. "In many ways, parts of the Middle East are similar to India in the early 1990s - very low compensation costs, a segment of highly educated technical workers, and historical exposure to English and other European languages."

While security and stability concerns may be too much for some, a large number of global companies (like Alcatel, Dell, GE, IBM and Microsoft) have already established call center, IT and BPO operations in markets like Tunisia, Morocco and Egypt.

Egypt and other North African nations stress their unique combination of European language skills, technical proficiency and low wages, while others in the region are developing alternate value-propositions. Authorities in Dubai (and to some extent, the other Emirates and neighboring gulf states) are pushing the region as a low-risk alternative to India, offering all the advantages of a workforce imported from South Asia, in combination with unbeatable infrastructure and very attractive tax and regulatory regimes. High-cost compared to others in the Index, Israel is promoting itself as an ideal location for upper-end R&D, as well as multilingual support centers, drawing on the strengths of its education system and the diversity of its population originating from all over Europe and the Middle East.

Two countries perform surprisingly poorly in the Index, despite their emerging success as offshore destinations: Turkey and South Africa. Both countries have succeeded in attracting significant offshore investments (such as Siemens' large operations center in Turkey, and a large Lufthansa call center in South Africa), but they perform poorly in the published Index, since their high costs relative to other emerging markets are not offset by correspondingly higher education levels or business environment ratings.

Implications for global location decisions

"Ultimately, the clearest message from the 2005 Global Services