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 Assignment 8 (Due: August 28, 2009, 13:00hrs)

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eyesee

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PostSubject: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Sun Aug 09, 2009 9:22 pm

As a student, you were invited by the Dean of the Institute of Computing to attend a seminar-workshop on information systems planning with some of the faculty members. In one of the sessions, a discussion of outsourcing came up. You have been asked to present your evaluation about outsourcing the information systems functions of the school.

Required:

You are to take a position- outsource or in-source and justify your position. (3000words)
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Marlie E. Sisneros

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PostSubject: Assignment 8   Mon Aug 17, 2009 11:45 pm

MARLIE's PAGE:

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------
my Retort;

First let me define and discuss first what is Insourcing and Outsourcing is all about, before i state my judgment toward that matter.



OF COURSE, EVERY LITTLE THING HAS IT'S OWN ADVANTAGE AND DISADVANTAGES.
IM BASING ON MY PAST INTERVIEWS WITH SOME COMPANIES IN MIS AND HRIS AND EVENTUALLY MOST OF THEM HAVING AN OUTSOURCED SYSTEM, OR WAHT WE CALLED OUTSOURCING.
ONE OF THE MAIN REASON OF MOST OF THEM IS THAT OUTSOURCING IS LESS EXPENSIVE OR CHEAPER THAN INSOURCING.
BECAUSE WHEN A COMPANY OUTSOURCE, IT IS ONLY FOR ONCE THE FREELANCE OR THE PROGRAMMER IS BEING PAID. AND WHEN THE SYSTEM BROKE DOWN IT IS RE INSTALLED, WHILE INSOURCING IS MORE EXSPENSIVE BECAUSE QUARTERLY OR MONTHLY A CERTAIN COMPANY IS PAYING A PROGRAMMER IN A HIGH COST.

SO, PROBABLY MY SIDE IS ON OUTSOURCING.
I HAVE NOTHING AGAINST INSOURCING OR AGAINST THOSE COMPANIES DOING INSOURCING, IT JUST THAT I VIEW OUTSOURCING MORE PRACTICAL NOW A DAYS.

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-Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering cost or making better use of time and energy cost, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of land,labor, capital, (information) technology and resources. Outsourcing became part of the business lexicon during the 1980s. It is essentially division of labor.Out sourcing in the information technology field has two meanings
One is to commission the development of an application to another
organization, usually a company that specializes in the development of
this type of application. The other is to hire the services of another
company to manage all or parts of the services that otherwise would be
rendered by an IT unit of the organization. The latter concept might
not include development of new applications.

why OUTSOURCE?
Cost
savings
. The lowering of the overall cost of the service to the
business. This will involve reducing the scope, defining quality
levels, re-pricing, re-negotiation, cost re-structuring. Access to
lower cost economies through offshoring called "labor arbitrage"
generated by the wage gap between industrialized and developing nations.
Focus on Core Business. Resources (for example investment, people,
infrastructure) are focused on developing the core business. For
example often organizations outsource their IT support to specilaised
IT services companies.
Cost
restructuring
. Operating leverage is a measure that compares fixed
costs to variable costs. Outsourcing changes the balance of this ratio
by offering a move from fixed to variable cost and also by making
variable costs more predictable.
Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement.
:arrow:Knowledge. Access to intellectual property and wider experience and knowledge.
Contract.
Services will be provided to a legally binding contract with financial
penalties and legal redress. This is not the case with internal
services.
Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house.
Access to talent. Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.
Capacity management. An improved method of capacity management of
services and technology where the risk in providing the excess capacity
is borne by the supplier.
Catalyst
for change
. An organization can use an outsourcing agreement as a
catalyst for major step change that can not be achieved alone. The
outsourcer becomes a Change agent in the process.
Enhance
capacity for innovation
. Companies increasingly use external knowledge
service providers to supplement limited in-house capacity for product
innovation.
:arrow:Reduce
time to market. The acceleration of the development or production of a
product through the additional capability brought by the supplier.
Commodification. The trend of standardizing business processes, IT
Services and application services enabling businesses to intelligently
buy at the right price. Allows a wide range of businesses access to
services previously only available to large corporations.
:arrow:Risk
management. An approach to risk management for some types of risks is
to partner with an outsourcer who is better able to provide the
mitigation.
Venture
Capital
. Some countries match government funds venture capital with
private venture capital for startups that start businesses in their
country.
Tax
Benefit
. Countries offer tax incentives to move manufacturing
operations to counter high corporate taxes within another country.

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-Insourcing is the opposite of outsourcing;
that is in sourcing (or contracting in) is often defined as the
delegation of operations or jobs from production within a business to
an internal (but 'stand-alone') entity that specializes in that
operation. In sourcing is a business decision that is often made to
maintain control of critical production or competencies. An alternate
use of the term implies transferring jobs to within the country where
the term is used, either by hiring local subcontractors or building a
facility.

))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))


~FIN~


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Jevelyn Labor

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PostSubject: Re: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Thu Aug 20, 2009 3:20 pm

As a student, you were invited by the Dean of the Institute of Computing to attend a seminar-workshop on information systems planning with some of the faculty members. In one of the sessions, a discussion of outsourcing came up. You have been asked to present your evaluation about outsourcing the information systems functions of the school.


First of all my personal decisions i would define what are outsourcing and outsourcing for more evaluative explanation. (char Laughing ).



Outsourcing ...

So, what is outsourcing? Outsourcing is contracting with another company or person to do a particular function. Almost every organization outsources in some way. Typically, the function being outsourced is considered non-core to the business. An insurance company, for example, might outsource its janitorial and landscaping operations to firms that specialize in those types of work since they are not related to insurance or strategic to the business. The outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers.

Reasons for outsourcing

Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.
Focus on Core Business. Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specilaised IT services companies.
Cost restructuring. Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.
Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement.
Knowledge. Access to intellectual property and wider experience and knowledge.
Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.
Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house.
Access to talent. Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.
Capacity management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.
Catalyst for change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.
Enhance capacity for innovation. Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.
Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier.
Commodification. The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of businesses access to services previously only available to large corporations.
Risk management. An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.
Venture Capital. Some countries match government funds venture capital with private venture capital for startups that start businesses in their country.
Tax Benefit. Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country.

Advantages
High strategic flexibility
Low investment risk.
Improved cash flow.
Access to state-of-the-art

Disadvantages
Possibility of choosing a bad supplier
Loss of control over the process & core technologies
"Hollowing out" of the corporation products and services.



Insourcing...

So, what is insourcing? It's a decision by an organization to retain functions internally rather than outsource. The decision is often made after the organization has performed independent benchmarking to determine that its costs and efficiencies are in line or better than those achieved by comparable organizations. The term is also used in cases where services are being brought back in house after a period of outsourcing them.

Advantages:
High degree of control.
Ability to oversee the entire process.
Economies of scale and/or scopepe.

Disadvantages
Reduces strategic flexibility.
Requires high investment.
Potential suppliers may offer superior products and services.

IN OUTSOURCING:


There is a big debate going on at the moment and people are constantly arguing whether or not it is better to outsource or to insource. We can mention a lot of good reasons and bad reasons for both but at the end of the day what is important stand in your own personal needs.

The biggest benefit that insourcing has stands in the fact that you get a very close contact with the person you are hiring. This can create a very good working environment but at the same time it does bring in some negative aspects that we have to think about. Unfortunately sometimes we can not find what we are looking for through insourcing. This basically means that what we want done can not be found locally. Such a fact shows us the biggest advantage why outsourcing is preferred in a comparison with insourcing: a wider set of choices. The truth is that when outsourcing we are faced with more people or companies to consider hiring. We are basically moving everything towards a much larger scale. Why outsourcing towards a single area or even country when we can think at a global scale.

If you talk to most Internet Marketers about outsourcing they will tell you that it is a must have. Most of them don't even think about insourcing when we have the possibility of outsourcing. The Internet has made it possible for a lot of people to meet. We now have a chance we never did in the past. In the past we had to invest into newspaper ads and similar actions in order to get in contact with professionals we needed. This does bring everything down in terms of time and possible success. When thinking about why outsourcing is better than insourcing we should always think about numbers. For instance, there is a huge chance that we can spare money by hiring someone from abroad that will do everything cheaper than on a local scale search. Also, the number of potential people worth hiring is much bigger. We can thus make sure at all times that we hire the best professionals we can afford.

There shouldn't be any doubt in anyone's mind that outsourcing is a lot better than insourcing. The reasons mentioned above are just the most obvious but the list can go on. In short, the most important facts we need to consider when thinking whether or not outsourcing is better than insourcing can be written with ease.

I actually asked my friends and classmates about what do they prefer, "OUTS or INS" and most of them (about 80%) agreed on OUTS because of these reasons:

- It is Cheaper
- It is Better
- You can Work with More Competent People
- You can make sure you get what you are looking for
- The Quality is Better in Most Cases
- Marketing time needed to look for people is drastically reduced
- Less Risks

http://en.wikipedia.org/wiki/Outsourcing
http://www.businessweek.com/magazine/content/06_05/b3969401.htm
http://www.theoutsourcerzone.com/why.htm
http://www.outsource2india.com/why_outsource/article_index.asp
http://www.businessweek.com/innovate/content/jul2009/id20090722_518153.htm?chan=innovation_special+report+--+innovation+in+a+recession_research+parks


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PostSubject: assignment # 8: In-source or outsource   Thu Aug 20, 2009 4:15 pm

In-sourcing or Outsourcing?


There’s a big deal today what are we prefer for? In-sourcing or outsourcing? In our assignment, our professor was given us a tasked to take in a position in outsourcing or in-sourcing. But before I choose what the best is for me, I will have some resources to identify what is outsourcing and what is in-sourcing.

What is in-sourcing?
In-sourcing is a business practice in which work that would otherwise have been contracted out is performed in house. 
In-sourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced. An example is the use of in-house engineers to write technical manuals for equipment they have designed, rather than sending the work to an outside technical writing firm. In this example, the engineers might have to take technical writing courses at a local college, university, or trade school before being able to complete the task successfully. Other challenges of in-sourcing include the possible purchase of additional hardware and/or software that is scalable and energy-efficient enough to deliver an adequate return on investment (ROI).
In-sourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is in-sourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.
The opposite of outsourcing can be defined as in-sourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as in-sourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for in-sourcing because it enables them to maintain a better control of what they outsource. In-sourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. In-sourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for in-sourcing in order to cut down the cost of labor and taxes amongst others. The trend towards in-sourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards in-sourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by in-sourcing their work rather than outsourcing it. According to recent studies, there is more wok in-sourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and in-source work equally.

What is outsourcing?
Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Outsourcing is a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations. Outsourcing can range from the large contract in which a company like IBM manages IT services for a company like Xerox to the practice of hiring contractors and temporary office workers on an individual basis.
Outsourcing began in the early eighties when organizations started delegating their non-core functions to an external organization that was specialized in providing a particular service, function or product. In outsourcing, the external organization would take on the management of the outsourced function.
Most organizations choose outsourcing because outsourcing offers a lot of advantages. When organizations outsource to countries like India, they benefit from lower costs and high-quality services. Moreover organizations can concentrate more on core functions once they outsource their non-core functions. Outsourcing can also help organizations make better use of their resources, time and infrastructure.
In outsourcing, the outsourcer and the outsourcing partner have a greater relationship when compared to the relationship between a buyer and a seller. In outsourcing, the outsourcer trusts the outsourcing partner with vital information. Outsourcing is no longer confined to the outsourcing of IT services. Outsourcers in the US and UK now outsource financial services, engineering services, creative services, data entry services and much more.
Most organizations are opting to outsource because outsourcing enables organizations to access intellectual capital, focus on core competencies, shorten the delivery cycle time and reduce costs significantly. Organizations feel outsourcing is an effective business strategy to help improve their business.

Why In-sourcing is my choice?

In-sourcing because outsourcing has gone wrong is a mistake. If you are thinking of taking a business function back in-house because of failings either in your supplier or, indeed, because of failings of your own, then just pause for a minute. There is one good reason to in-source, to which we will come, but the myriad of technical issues, operational difficulties and relationship problems that can cause you to despair of ever having uttered the ‘o’ word are not it. In-sourcing for the sake of it merely compounds your troubles. You might be forgiven for thinking that in-sourcing was the latest outsourcing trend, according to some recent media reports. But what is really happening on the ground is far harder to discern and so far more complex.

Right choices
Having said that, insourcing is an option that many are likely to consider at some point, whether it is for what we believe are the negative reasons of supplier factors (complacency, overselling, rising costs, and the like) or client factors (poor rationale, poor sourcing, poor internal management, and so on). However, the reason why insourcing can compound troubles in these cases is twofold.
First, insourcing can be as problematic as outsourcing was in the first place. In particular, in-house skills and systems that have been reduced or removed have to be returned, a process that carries risk and cost. Second, and more profoundly, insourcing for these reasons will only store up problems for the future.
The issue here is that provided outsourcing as an option has been reviewed alongside other sourcing options, then in the vast majority of cases outsourcing is usually right in terms of the decision but, if it struggles to realise benefits, goes wrong in the execution. Execution issues can, with time and application, be put right. But if the fundamental reasons for outsourcing still hold – reasons such as wanting to drive through efficiency, effectiveness and transformational changes – then to go back on the decision represents an opportunity cost for the business. When added to the cost of in-sourcing itself, the total might be very detrimental indeed.

One good reason
There is, we think, one good reason to consider in-sourcing. That is when external factors are such that the situation in which the organization finds itself has so changed that it becomes not only attractive but right.
This does happen and there are well-publicized examples to illustrate. For example, when JP Morgan merged with Bank One the economies-of-scale that it had sought by outsourcing with IBM were suddenly realizable internally. Alternatively, when Cable & Wireless decided to in-source, again from a deal with IBM, the reasons were good: finding itself in a trading position where it wanted to exercise the kind of control over costs that could only be gained by in-sourcing.
These, though, are seismic changes. They are extraordinary, just as the in-sourcing that accompanies them should be as well.
In fact, the real outsourcing story is far more positive. The industry is maturing. We are seeing sourcing decisions and governance improving, as companies become savvier both in terms of what they want and in terms of what they ask from providers. Moreover, providers are rising to the challenge too. They realize that it is in the interests of all concerned to have deals that allow clients and providers alike to flourish. These are, after all, partnerships.
But remember, insourcing because outsourcing has gone wrong is a mistake. Far better is to get outsourcing right in the first place.

Why not Outsourcing?

Outsourcing risks
However, while companies can benefit from the technology resources at their outsourcer, not having any internal network skills can be risky. Companies might find it difficult to assess whether they are getting the best value for money and that services are fit for purpose, for instance.
Of course, lacking the skills to deploy new technology does not necessarily mean companies should outsource all ownership and management. The majority of networking kit is sold through the channel, which means companies can call on the implementation skills of third parties if they want to deploy new technology. They will however need to train or acquire staff that can manage the new network.

Is it cheaper?
Outsourcing has long been a popular choice for enterprises looking to save money. Outsourcers are able to offer the benefit of scale because they can centralize the key IT and network functions and service multiple accounts at the same time. This allows them to offer the same service as the internal team but at a lower cost of delivery.
The experience outsourcers have with network management also means they should also have more effective processes based on established best practices to deal with the most common networking issues.
Network outsourcers can make the total cost of ownership (TCO) equation look even more attractive as they are able to source equipment from suppliers at a substantially cheaper rate. Adrian Lau, IT services manager at ST Mary's NHS Trust, says: "We buy our network equipment through Damovo. We use open-book costing where Damovo puts five per cent on the list price. This is cheaper than buying through a traditional distributor."
Open-book costing is becoming more common throughout the network outsourcing industry. Richard Mahony, principal analyst at Ovum, says: "Contract pricing is becoming more transparent. However, companies that do sign up to open-book pricing, need to be aware of exactly what it covers, as outsourcers will always try and hide some margin somewhere."

Barriers
Smaller businesses are likely to benefit most from network outsourcing but are often the most reluctant to take the plunge. At the most basic level they typically find it difficult to calculate the cost of managing their IT, and often lump it together with general administration costs. This makes it hard for them to understand the savings they could make from outsourcing.
But perhaps the principal barrier for enterprises thinking about network outsourcing is nervousness over security. Enterprises now need to be compliant with multiple regulations and laws, nearly all of which mandate a high level of data security. Any company choosing an outsourcer will need to be doubly sure that it will actually improve on the existing security processes.
Outsourcing for many companies has traditionally meant job losses, which made it an extremely hard sell to employees. However, far from making IT staff redundant, outsourcing the network and support infrastructure should free up IT staff to work on the company's strategic business applications.
References:
http://www.outsource2india.com/why_india/articles/outsourcing-versus-insourcing.asp
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html















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PostSubject: Assignment 8   Sun Aug 23, 2009 12:18 am

Why outsourcing and why in sourcing???

Well, in this kind of situation I cannot easily judge which is better. Before we are going to choose, let’s define these two words so that we can able to decide which of these is better.

As I scan over the internet, I found these definitions which are better to understand what an outsourcing really is. According to a common online encyclopedia, it is the procuring of services or products, such as the parts used in manufacturing a motor vehicle, from an outside supplier or manufacturer in order to cut costs.
Another online investment dictionary defines that, it is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.

Since most of the companies now suffering from financial crisis due to the recent world financial crises, most of them need to minimize their expense in order for them to sustain and support their companies.

According to small business encyclopedia, outsourcing occurs when a company purchases products or services from an outside supplier, rather than performing the same work within its own facilities, in order to cut costs. The decision to outsource is a major strategic one for most companies, since it involves weighing the potential cost savings against the consequences of a loss in control over the product or service. Some common examples of outsourcing include manufacturing of components, computer programming services, tax compliance and other accounting functions, training administration, customer service, transportation of products, benefits and compensation planning, payroll, and other human resource functions. A relatively new trend in outsourcing is employee leasing, in which specialized vendors recruit, hire, train, and pay their clients' employees, as well as arrange health care coverage and other benefits.

Most organizations choose outsourcing because outsourcing offers a lot of advantages. When organizations outsource to countries like India, they benefit from lower costs and high-quality services. Moreover organizations can concentrate more on core functions once they outsource their non-core functions. Outsourcing can also help organizations make better use of their resources, time and infrastructure.

In outsourcing, the outsourcer and the outsourcing partner have a greater relationship when compared to the relationship between a buyer and a seller. In outsourcing, the outsourcer trusts the outsourcing partner with vital information. Outsourcing is no longer confined to the outsourcing of IT services. Outsourcers in the US and UK now outsource financial services, engineering services, creative services, data entry services and much more.

Most organizations are opting to outsource because outsourcing enables organizations to access intellectual capital, focus on core competencies, shorten the delivery cycle time and reduce costs significantly. Organizations feel outsourcing is an effective business strategy to help improve their business.
Now, we are going to discuss what is in sourcing is all about. You may define in sourcing as the opposite of outsourcing but it is still vague for it is still a broad term. According to a common online encyclopedia, insourcing is the (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity that specializes in that operation. Insourcing is a business decision that is often made to maintain control of critical production or competencies. An alternate use of the term implies transferring jobs to within the country where the term is used, either by hiring local subcontractors or building a facility.

According to PR Web, insourcing was becoming more common by 2006 as businesses had less than satisfactory experiences with outsourcing (including customer support). Many outsourcing proponents responded to a negative consumer opinion backlash resulting from outsourcing their communications management to vendors who rely on overseas operations.
To those who are concerned that nations may be losing a net amount of jobs due to outsourcing, some point out that insourcing also occurs. According to a study by Mary Amiti and Shang-Jin Wei, in the United States, the United Kingdom, and many other industrialized countries more jobs are insourced than outsourced. They found that out of all the countries in the world they studied, the U.S. and the U.K. actually have the largest net trade surpluses in business services. Countries with a net deficit in business services include Indonesia, Germany and Ireland.[1]
Insourcing is loosely referred in call centers who are doing the work of the outsourcing companies. Companies that outsource include Dell, Hewlett Packard, Symantec, and Linksys. The callcenters and technicians that are contracted to handle the outsourced work are usually over-seas. Customers may refer to these countries as "India" technical support if they are hard to understand over telecommunications. These insourcing companies were a great way to save money for the outsourcing of work, but quality varies, and poor performance has sometimes harmed the reputations of companies who provide 24/7 customer/technical support.

The Organization for International Investment, a Washington D.C. trade association, uses the term to describe the creation of jobs through foreign direct investment within the United States.

When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as insourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for insourcing because it enables them to maintain a better control of what they outsource. Insourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. Insourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.

Organizations involved in production usually opt for insourcing in order to cut down the cost of labor and taxes amongst others. The trend towards insourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards insourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by insourcing their work rather than outsourcing it. According to recent studies, there is more wok insourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and insource work equally.

Now we are going to decide which fits to the organization. If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers.
If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverables, outsourcing is again a good option.
If your work involves production, then it would be more ideal for your organization to opt for insourcing, as you can save on transportation costs and exercise a better control over your project.

It is not necessary to choose outsourcing over insourcing or vice versa. Your organization can outsource and insource at the same time. By outsourcing and insourcing simultaneously, you can have the best of what both offers and your business can get a competitive advantage!
For me, outsourcing is better for we may minimize our expenses and labor cost. That is why many multimillion companies and businesses firms not only that but also colleges and universities choose outsourcing.

Take note that there are advantages of outsourcing. These are:
Cost savings. Many businesses embrace outsourcing as a way to realize cost savings or better cost control over the outsourced function. Companies usually outsource to a vendor that specializes in a given function and performs that function more efficiently than the company could, simply by virtue of transaction volume.

Staffing levels. Another common reason for outsourcing is to achieve headcount reductions or minimize the fluctuations in staffing that may occur due to changes in demand for a product or service. Companies also outsource in order to reduce the workload on their employees (freeing them to take on additional moneymaking projects for the business), or to provide more development opportunities for their employees by freeing them from tedious tasks.

Focus.
Some companies outsource in order to eliminate distractions and force themselves to concentrate on their core competencies. This can be a particularly attractive benefit for start-up firms. Outsourcing can free the entrepreneur from tedious and time-consuming tasks, such as payroll, so that he or she can concentrate on the marketing and sales activities that are most essential to the firm's long-term growth and prosperity. "What an outsourcing partner really sells is focus," wrote Adam Katz-Stone in Baltimore Business Journal. "In accounting for instance, that is something that typically is seen as necessary but not essential, not the core of the business. So you bring in an outsourcing partner and then you don't have to think about that any more. You can focus your energies on sales, marketing, all the other things that matter more."

Morale. This is an often-overlooked but still notable benefit that can sometimes be gained by initiating an outsourcing relationship. "Often a business's lack of internal expertise or dedication to non-core tasks results in poor attitudes and ultimately poor performance," wrote Kevin Grauman in CPA Journal. "This can lead to overlap and duplication of internal efforts. An effectively designed and ongoing communication process emanating from one or more outsourcers can greatly reduce or eliminate these duplications."

Flexibility. Still others outsource to achieve greater financial flexibility, since the sale of assets that formerly supported an outsourced function can improve a company's cash flow. A possible pitfall in this reasoning is that many vendors demand long-term contracts, which may reduce flexibility.
Knowledge. Some experts tout outsourcing of computer programming and other information technology functions as a way to gain access to new technology and outside expertise. This may be of particular benefit to small businesses, which may not be able to afford to hire computer experts or develop the in-house expertise to maintain high-level technology. When such tasks are outsourced, the small business gains access to new technology that can help it compete with larger companies.

Accountability. Outsourcing is predicated on the understanding—shared by business and vendor alike—that such arrangements require quality service in exchange for payment. "Paying for a business service creates the expectation of performance," stated Grauman. "Outsourcers are well aware that this accountability is both practical and legal, with fiscal implications. The same cannot be said for internally provided functions."

Bear in mind also that there are disadvantages of outsourcing. Some of the major potential disadvantages to outsourcing include poor quality control, decreased company loyalty, a lengthy bid process, and a loss of strategic alignment. All of these concerns can be addressed and minimized, however, by companies who go about the outsourcing process in an informed and deliberate fashion. Info World's Maggie Biggs counsels businesses to define "exactly what business processes and/or functions it makes sense to maintain via a service relationship. Unless you have a lot of resources to expend, it may make sense to prioritize outsourcing projects based on the number of benefits you expect to gain from the arrangement." There may also be inherent advantages of maintaining certain functions internally. For example, company employees may have a better understanding of the industry, and their vested interests may mean they are more likely to make decisions in accordance with the company's goals. Indeed, most analysts discourage companies from outsourcing core functions that directly affect the products or services that the business offers.

Source:
http://www.outsource2india.com/why_india/articles/outsourcing-versus-insourcing.asp
http://www.answers.com/topic/outsourcing
















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PostSubject: ass8   Sun Aug 23, 2009 6:32 pm

OUTSOURCING

>>Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company.[1] The decision to outsource is often made in the interest of lowering cost or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of land, labor, capital, (information) technology and resources[citation needed]. Outsourcing became part of the business lexicon during the 1980s. It is essentially a division of labour.Out sourcing in the information technology field has two meanings [2] One is to commission the development of an application to another organization, usually a company that specializes in the development of this type of application. The other is to hire the services of another company to manage all or parts of the services that otherwise would be rendered by an IT unit of the organization. The latter concept might not include development of new applications.

The Advantages of Outsourcing

* Outsourcing your non-core activities will give you more time to concentrate on your core business processes
* Offshoring 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
* Offshoring can help your organization save on capital expenditures
* By outsourcing, your company can save on management problems as your offshore partner will be managing the team who does your work
* 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


The Disadvantages of 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
* Offshoring 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.


Benefits of outsourcing

1. Take advantage of the cost-advantages!

Outsourcing to countries such as India can give you access to cost-effective services. The same services with the same level of quality are offered in India for a much lower cost! This cost-advantage has increased the number of services that are being offered to India. Services such as call center services, teleradiology, medical billing, etc can help you save up to 60% of your total costs when outsourced! Getting access to high-quality services at a cost-effective price is the biggest benefit that you can get while outsourcing. Outsource and reap the benefits of outsourcing.
2. See an increase in your business

Another benefit of outsourcing is seeing a big increase in your profits, productivity, level of quality, business value, business performance and much more. Outsourcing can help you see an increase in almost every aspect of your business. Outsource and see your organization experience an increase in every aspect with these benefits of outsourcing.
3. Save Big!

One of the benefits of outsourcing is that you can save on every aspect of your business and increase your profits. When you outsource, you can save on time, effort, infrastructure and manpower. Since you don't have to invest in infrastructure, you can also save on making unnecessary fixed investments. Outsourcing removes the burden of changing or maintaining infrastructure. You can also save on capital expenditure. Outsourcing can also help you save on training costs, because you do not have to invest in manpower. These savings will help bring about an increase in your revenue. Your organization can also save on investing in expensive software and technologies.
4. Get access to specialized services

By outsourcing you can get expert and skilled services. This benefit of outsourcing has been the key reason why several outsourcers opt for outsourcing. The function that you outsource may not be your core competency but you can find an outsourcing partner who is specialized in that particular business process. Your outsourcing partner will be able to provide more proficient services. This is yet another benefit of outsourcing, because if you perform all your business processes in-house, you will not be able to provide specialized and skilled services. Outsourcing can give you this advantage.

Outsource2india is an organization that offers a wide range of specialized business process outsourcing solutions to global clients. Outsourcing business processes to us has enabled clients to cross-leverage our skills and expertise across industry verticals and technologies to achieve greater efficiency and quality levels in the outsourced process.

At Outsource2india, we have dedicated teams that offer outsourced services across a range of services which include Call center, Data Entry Servicesand Engineering Services, Healthcare Services, Financial Services, Software Development, Research and Analysis Services, Photo Editing Services, Creative Services and Web-analytics Services.

Outsource specific processes to our expert teams and increase your ROI. Contact O2I here.
5. Concentrate more on your core business

One of the benefits of outsourcing is that your organization will be free to concentrate on your core business. By outsourcing all your non-core functions, your employees can be put to better use and you will be able to see a huge growth in your core business.
6. Make faster deliveries to customers

Another benefit of outsourcing is that you can make quicker deliveries to customers. Your outsourcing partner will be able to provide faster deliverables and you in turn will be able to make quick deliveries to your customer. Faster deliveries can also help you save on time.
7. Improved customer satisfaction

With timely deliveries and high-quality services you can impress your customers. Outsourcing can help you benefit from increased customer satisfaction and your customers will remain loyal to your organization.
8. Benefit from time zone advantages

Outsourcing to countries such as India has a time zone advantage. Your night will be India's day. With this advantage, your outsourcing partner can complete critical work and send it to you the next day. Thus, your work is continued by your outsourcing partner even after your employees go home. This enables the work to be completed much faster and gives your business a competitive advantage. This is one of the benefits of offshore outsourcing.
9. Increased efficiency

Another benefit of outsourcing is increased efficiency. Your non-core business functions will be performed efficiently by your outsourcing partner, while your core functions can be efficiently carried out in-house. Thereby you can achieve overall efficiency and see an increase in your profits.
10. Give your business a competitive edge!

Outsourcing can help your organization gain a competitive edge in the market. You can also get access to specialized services for different business processes and thereby provide your customers with best-of breed services. Such strategic outsourcing can give your business a competitive edge among your peers. The benefits of outsourcing can give your organization a cutting-edge in the worldwide market. Outsource and take advantage of the benefits of outsourcing.
11. Outsourcing countries also benefit from outsourcing

Countries such as U.S, U.K, Norway and Australia amongst others can benefit by outsourcing. The economy of these countries has increased tremendously after outsourcing. In the U.S, after the outsourcing boom, the economy has increased, jobs have increased and the wages of American workers have increased.


>>if i would take a position, i would suggest outsourcing.
because it is less hassle since it is contractual,
the organization will still focus on its operation.
with this you can cater the needs of your clients.
and also organizations can save on time, effort,
manpower and would also aid organizations in making quicker deliveries to clients.
>> another is that if there are services that do not fall under teh core competency of the organization
then, outsourcing is a goo option. because you will be able to access the service.
>>Most organizations are opting to outsource because outsourcing enables organizations to access intellectual capital,
focus on core competencies, shorten the delivery cycle time and reduce costs significantly.
Organizations feel outsourcing is an effective business strategy to help improve their business.

reference:

http://www.outsource2india.com/why_outsource/articles/benefit_outsourcing.asp

http://www.outsource2india.com/why_outsource/articles/advantages-disadvantages-outsourcing.asp

http://en.wikipedia.org/wiki/Outsourcing




... not yet finished...


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PostSubject: outsourcing vs. insourcing   Mon Aug 24, 2009 3:56 am

Before anything else, I will just give the meaning between outsourcing and insourcing. . .There it goes. . .

When we say outsourcing it is subcontracting a process, such as product design or manufacturing, to a third-party company.The decision to outsource is often made in the interest of lowering cost or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of land, labor, capital, (information) technology and resources[citation needed]. Outsourcing became part of the business lexicon during the 1980s. It is essentially a division of labor. Out sourcing in the information technology field has two meanings. One is to commission the development of an application to another organization, usually a company that specializes in the development of this type of application. The other is to hire the services of another company to manage all or parts of the services that otherwise would be rendered by an IT unit of the organization. The latter concept might not include development of new applications.

While insourcing is the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity that specializes in that operation. Insourcing is a business decision that is often made to maintain control of critical production or competencies. An alternate use of the term implies transferring jobs to within the country where the term is used, either by hiring local subcontractors or building a facility.

So if ever the dean of Institute of Technology would asked me to present my evaluation here in USeP-Obrero, Davao, I would chose outsourcing for this institution because as what the mentioned above that it is "lowering cost or making better use of time" then, we all know that we were in the global crisis so we must find a way in which we can have a lower cost for this. I also observed nowadays that the institution really needs outsourcing because we need an specialists particularly in the field of technology for our system and we don't have that of person here perhaps there are but they only knew the basics and other that they have class to be managed so they could not concentrate in the said system. Then, for my presentation here are some topic I will give:

Reasons of outsourcing:
* lower cost
* improve quality
*operational expertise
*enhance capacity for innovation
*reduce time to market
*tax benefit

Quality of Service

Quality of service is measured through a service level agreement (SLA) in the outsourcing contract. In poorly defined contracts there is no measure of quality or SLA defined. Even when an SLA exists it may not be to the same level as previously enjoyed. This may be due to the process of implementing proper objective measurement and reporting which is being done for the first time. It may also be lower quality through design to match the lower price.

There are a number of stakeholders who are affected and there is no single view of quality. The COE may view the lower quality acceptable to meet the business needs at the right price. The retained management team may view quality as slipping compared to what they previously achieved. The end consumer of the service may also receive a change in service that is within agreed SLAs but is still perceived as inadequate. The supplier may view quality in purely meeting the defined SLAs regardless of perception or ability to do better.

Quality in terms of end-user-experience is best measured through customer satisfaction questionnaires which are professionally designed to capture an unbiased view of quality. Surveys can be one of research. This allows quality to be tracked over time and also for corrective action to be identified and taken.

Productivity

Offshore outsourcing for the purpose of saving cost can often have a negative influence on the real productivity of a company. Rather than investing in technology to improve productivity, companies gain non-real productivity by hiring fewer people locally and outsourcing work to less productive facilities offshore that appear to be more productive simply because the workers are paid less. Sometimes, this can lead to strange contradictions where workers in a developing country using hand tools can appear to be more productive than a U.S. worker using advanced computer controlled machine tools, simply because their salary appears to be less in terms of U.S. dollars.

In contrast, increases in real productivity are the result of more productive tools or methods of operating that make it possible for a worker to do more work. Non-real productivity gains are the result of shifting work to lower paid workers, often without regards to real productivity. The net result of choosing non-real over real productivity gain is that the company falls behind and obsoletes itself overtime rather than making investments in real productivity.

Online outsourcing is the business process of contracting third-party providers (often overseas) to supply products or services which are delivered and paid for via the internet. Online outsourcing emerged in the early 2000s, along with advances in internet technology, as a viable option for SMEs and entrepreneurs who lacked the necessary financial resources to meet the costs associated with traditional forms of outsourcing.

Why outsource I.T. to the Philippines?

The Philippines has now stepped out of India’s shadow to become a competitive KPO (Knowledge Process Outsourcing) and BPO (Business Process Outsourcing) destination. The latest growth spurt in the Philippines’ outsourcing industry doesn’t just come from a mushrooming number of call centers but also from higher-end services such as web development, software development, legal services, medical transcription, animation and other services. When you choose to outsource I.T. to the Philippines, you reduce and control your operating costs, gain access to world-class capabilities and maximize your productivity.

Why Philippines particularly here in USeP main?

People Power

The Filipino workforce is one of the most compelling advantages the Philippines has over any other Asian country. With higher education priority, the literacy rate in the country is 94.6% - among the highest. English is taught in all schools, making the Philippines the world’s largest English-speaking country. Every year, there are some 350,000 graduates enriching the professional pool.

Strategic Business Location

The Philippines is located right in the heart of Asia – today the fastest growing region. It is located within four hours flying time from major capitals of the region. Sited at the crossroads of the eastern and western business, it is a critical entry point to over 500 million people in the ASEAN market and a gateway of international shipping and air lanes suited for European and American businesses.

Abundant Resources

An archipelago like the Philippines offers diverse natural resources, from land to marine to mineral resources. It is also the biggest copper producer in Southeast Asia and among the top ten producer of gold in the world. It is also home to 2,145 fish species, four times more than those found in the Bahamas. The 7,100 islands boast of beautiful beaches and breathtaking sceneries that offer soothing leisure and relaxation spots for vacationers and tourists.

Low Cost of Doing Business

Wages are typically less than a fifth of that in the U.S. Local communication, electricity and housing costs are also 50% lower compared to the U.S. rates. Foreign companies that are now outsourcing programming and business processes to the Philippines estimate 30 to 40% business cost savings, 15 to 30% call center services and application systems and 35 to 50% software development.

Liberalized and Business-Friendly Economy

An open economy allows 100% foreign ownership in almost all sectors and supports a Build-Operate-Transfer (BOT) investment scheme that other Asian countries emulate. Government corporations are being privatized and the banking, insurance, shipping telecommunications and power industries have been deregulated. Incentive packages include the corporate income tax, reduced to a current 32%, with companies in the Special Economic Zones are subject to only 5% overall tax rates. Multinationals looking for regional headquarters are entitled to incentives such as tax exemptions and tax and duty-free importation of specific equipment and materials.

Developing Infrastructure for Global Growth

A well-developed communication, transportation, business and economic infrastructure links the three major islands and distinguishes the Philippine economy. Highly accessible by air, water and cyberspace, liberalization of inter-island shipping and domestic aviation further sparked improved facilities and services. The container terminals are suited to handle cargo traffic at the highest levels of efficiency.

Communication provides redundant international connectivity 24/7 with fiber optic cable as primary backbone network and satellite as backup. Economic reforms emphasize regional growth, converting remote areas into business centers. The landmark BOT legislation allows private investors to build and operate infrastructure, then turn it over to the Philippine government after a set period of time.

reference:
http://en.wikipedia.org/wiki/Outsourcing
http://en.wikipedia.org/wiki/Insourcing
http://www.outsourceit2philippines.com/articles-outsource/why-outsource-philippines.htm


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carla comoda

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PostSubject: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Mon Aug 24, 2009 3:58 am

Assuming that i was able to attend a seminar-workshop on information systems planning with some of the faculty members. So first i should give the definition of Outsourcing based on the internet.

Outsourcing of information systems functions has become a frequently chosen
alternative of providing information systems services. This is true across many
industries and all firm sizes. Practitioners have developed a number of guidelines
relating to outsourcing. While many of these guidelines seem plausible their under­
lying economic reasons are often not identified because they are not based on any
theory. We analyze outsourcing of information systems functions using the trans­
action cost economics framework. The framework allows us to incorporate pro­
duction as well as coordination costs in evaluating the outsourcing option.
IS outsourcing, organization economics, transaction cost, markets, hierarchies,
asset specificity.
Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include information technology, human resources, facilities, real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, CAD drafting, customer service, market research, manufacturing, designing, web development, print-to-mail, content writing, ghostwriting and engineering. Offshoring is the type of outsourcing in which the buyer organization belongs to another country.

Outsourcing and off shoring are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring. Offshoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same corporation/company.

With increasing globalization of outsourcing companies, the distinction between outsourcing and offshoring will become less clear over time. This is evident in the increasing presence of Indian outsourcing companies in the United States and United Kingdom. The globalization of outsourcing operating models has resulted in new terms such as nearshoring, noshoring, and rightshoring that reflect the changing mix of locations. This is seen in the opening of offices and operations centers by Indian companies in the U.S. and UK. A major job that is being outsourced is accounting. They are able to complete tax returns across seas for people in America.

Multisourcing refers to large outsourcing agreements (predominantly IT).[9] Multisourcing is a framework to enable different parts of the client business to be sourced from different suppliers. This requires a governance model that communicates strategy, clearly defines responsibility and has end-to-end integration.

Strategic outsourcing is the organizing arrangement that emerges when firms rely on intermediate markets to provide specialized capabilities that supplement existing capabilities deployed along a firm’s value chain (see Holcomb & Hitt, 2007). Such an arrangement produces value within firms’ supply chains beyond those benefits achieved through cost economies. Intermediate markets that provide specialized capabilities emerge as different industry conditions intensify the partitioning of production. As a result of greater information standardization and simplified coordination, clear administrative demarcations emerge along a value chain. Partitioning of intermediate markets occurs as the coordination of production across a value chain is simplified and as information becomes standardized, making it easier to transfer activities across boundaries.

The Webster's Universal Dictionary meaning of "Outsourcing" is: "A company or person that provides information; to find a supplier or service, to identify a source". It is very important to be clear about what is meant by outsourcing. Outsourcing essentially refers to how things are done rather than what is done. It describes how for example IT services are obtained; not what the services are.

Very simply outsourcing can be defined as a process in which a company delegates some of its in-house operations/processes to a third party. Thus outsourcing is a contracting transaction through which one company purchases services from another while keeping ownership and ultimate responsibility for the underlying processes. The clients inform their provider what they want and how they want the work performed. So the client can authorize the provider to operate as well as redesign basic processes in order to ensure even greater cost and efficiency benefits.

Although the above definition of outsourcing may seem very similar to contracting, it is to be said that contracting and outsourcing are in no way related. Generally in contracting the ownership or control of the operation or process being contracted is with the parent company, whereas in outsourcing the control of the process is with the third party instead of the parent company. So in other words, outsourcing can be defined as phenomena in which a company delegates a part of its in-house operations to a third party with the third party gaining full control over that operation/process.

One way of looking at it is that outsourcing is just a name for already existing practices. Services such as, bureau services, contract programming and project management have been outsourced for a long time. In its present meaning, however, outsourcing refers to a greater level of handing over ownership and/or managerial control than has before been the case.

Companies turn to resources outside their organizational structure usually to save money and/or make use of the skilled professionals. For instance, a company might outsource its IT management because it is cheaper to contract a third-party to do so than it would be to build its own in-house IT management team. Or a company could outsource all of its data storage needs because it is easier and cheaper than buying and maintaining its own data storage devices. A business might also outsource its human resource tasks to another enterprise instead of having its own dedicated human resources staff.




» Account Payable Outsourcing » Application Development Outsourcing
» Advantages of Outsourcing » Back Office Outsourcing
» Benefits of Outsourcing » Business Outsourcing
» Pro And Cons Of Outsourcing » China Outsourcing
» Customer Service Outsourcing » Data Entry Outsourcing
» Disadvantages of Outsourcing » Effects of Outsourcing
» Global Outsourcing » Graphic Design Outsourcing
» HR Outsourcing Company » HR Outsourcing Services
» Human Resource Outsourcing » Information Technology Outsourcing
» IT Services Outsourcing » IT outsourcing solution
» Offshore Outsourcing » Outsourcing Computer Hardware
» Outsourcing Jobs India » Outsourcing Problem
» Outsourcing Statistics » Offshore Outsourcing Consultant
» Telemarketing Outsourcing » Offshore Outsourcing Strategy
» Outsourcing » Strategic Outsourcing
» Outsourcing Business Services » Outsourcing Research
» Job Outsourcing » Outsourcing Fulfillment
» Oasis Outsourcing » Logistics Outsourcing
» Medical Transcription Outsourcing » Offshore Outsourcing Call Center
» International Outsourcing » Human Resource Outsourcing Services
» Accounting Outsourcing » Legal Outsourcing
» Business Process Outsourcing » IT Outsourcing
» Outsourcing American Jobs » Knowledge Process Outsourcing
» Contact Center Outsourcing » Outsourcing in India
» Definition of Outsourcing » Outsourcing Services
» History of Outsourcing » Offshore Outsourcing Research
» Offshore Outsourcing India » Outsourcing to a foreign country
» BPO Business Process Outsourcing » Finance and accounting outsourcing
» Offshore Business Process Outsourcing » Comprehensive Human Resource Outsourcing
» Outsourcing Software Development » Outsourcing American Jobs To Foreign
CountrY

Benefits of Outsourcing
Outsource and take advantage of the benefits of offshore outsourcing are the following:
1. Take advantage of the cost-advantages!

Outsourcing to countries such as India can give you access to cost-effective services. The same services with the same level of quality are offered in India for a much lower cost! This cost-advantage has increased the number of services that are being offered to India. Services such as call center services, teleradiology, medical billing, etc can help you save up to 60% of your total costs when outsourced! Getting access to high-quality services at a cost-effective price is the biggest benefit that you can get while outsourcing. Outsource and reap the benefits of outsourcing.
2. See an increase in your business

Another benefit of outsourcing is seeing a big increase in your profits, productivity, level of quality, business value, business performance and much more. Outsourcing can help you see an increase in almost every aspect of your business. Outsource and see your organization experience an increase in every aspect with these benefits of outsourcing.
3. Save Big!

One of the benefits of outsourcing is that you can save on every aspect of your business and increase your profits. When you outsource, you can save on time, effort, infrastructure and manpower. Since you don't have to invest in infrastructure, you can also save on making unnecessary fixed investments. Outsourcing removes the burden of changing or maintaining infrastructure. You can also save on capital expenditure. Outsourcing can also help you save on training costs, because you do not have to invest in manpower. These savings will help bring about an increase in your revenue. Your organization can also save on investing in expensive software and technologies.
4. Get access to specialized services

By outsourcing you can get expert and skilled services. This benefit of outsourcing has been the key reason why several outsourcers opt for outsourcing. The function that you outsource may not be your core competency but you can find an outsourcing partner who is specialized in that particular business process. Your outsourcing partner will be able to provide more proficient services. This is yet another benefit of outsourcing, because if you perform all your business processes in-house, you will not be able to provide specialized and skilled services. Outsourcing can give you this advantage.

Outsource2india is an organization that offers a wide range of specialized business process outsourcing solutions to global clients. Outsourcing business processes to us has enabled clients to cross-leverage our skills and expertise across industry verticals and technologies to achieve greater efficiency and quality levels in the outsourced process.

At Outsource2india, we have dedicated teams that offer outsourced services across a range of services which include Call center, Data Entry Servicesand Engineering Services, Healthcare Services, Financial Services, Software Development, Research and Analysis Services, Photo Editing Services, Creative Services and Web-analytics Services.

Outsource specific processes to our expert teams and increase your ROI. Contact O2I here.
5. Concentrate more on your core business

One of the benefits of outsourcing is that your organization will be free to concentrate on your core business. By outsourcing all your non-core functions, your employees can be put to better use and you will be able to see a huge growth in your core business.
6. Make faster deliveries to customers

Another benefit of outsourcing is that you can make quicker deliveries to customers. Your outsourcing partner will be able to provide faster deliverables and you in turn will be able to make quick deliveries to your customer. Faster deliveries can also help you save on time.
7. Improved customer satisfaction

With timely deliveries and high-quality services you can impress your customers. Outsourcing can help you benefit from increased customer satisfaction and your customers will remain loyal to your organization.
8. Benefit from time zone advantages

Outsourcing to countries such as India has a time zone advantage. Your night will be India's day. With this advantage, your outsourcing partner can complete critical work and send it to you the next day. Thus, your work is continued by your outsourcing partner even after your employees go home. This enables the work to be completed much faster and gives your business a competitive advantage. This is one of the benefits of offshore outsourcing.
9. Increased efficiency

Another benefit of outsourcing is increased efficiency. Your non-core business functions will be performed efficiently by your outsourcing partner, while your core functions can be efficiently carried out in-house. Thereby you can achieve overall efficiency and see an increase in your profits.
10. Give your business a competitive edge!

Outsourcing can help your organization gain a competitive edge in the market. You can also get access to specialized services for different business processes and thereby provide your customers with best-of breed services. Such strategic outsourcing can give your business a competitive edge among your peers. The benefits of outsourcing can give your organization a cutting-edge in the worldwide market. Outsource and take advantage of the benefits of outsourcing.
11. Outsourcing countries also benefit from outsourcing

Countries such as U.S, U.K, Norway and Australia amongst others can benefit by outsourcing. The economy of these countries has increased tremendously after outsourcing. In the U.S, after the outsourcing boom, the economy has increased, jobs have increased and the wages of American workers have increased.

Example of Outsourcing job
Call center outsourcing remains a popular and viable way to deliver high quality service while lowering operating costs in the call center. By outsourcing call center functions, companies can improve productivity, extend their service hours and place focus on their core competencies.

Services
For over a decade OUTSOURCE has provided Human Capital Resource Management Services to national corporations, local, state and federal government agencies. We deliver high quality Staff Augmentation, IT Consulting, Payroll Services, and Medical, Technical and Management Training Solutions to a diverse client base. OUTSOURCE professionals provide the missing piece to our client's resource puzzle.


Ingrained in every service we deliver, our first goal is to provide our clients with superior customer service, which starts with our quality processes. Whether we are providing human capital, managing a large consulting project, or delivering training solutions, our processes are tailored from start to finish. We ensure our clients receive the attention, quality, and ROI they deserve.

=Outsourcing Information Technology to Asia=
A combination of high overhead in the United States and strong cultural ties between the domestic and Asian information technology industries have led many companies to outsource labor-intensive software programming to Asia and Eastern Europe.

India has always been a major player in information technology (IT); they even make their own supercomputers for predicting monsoons. It wasn't until the Y2K bug emerged that the need for legions of cheap programmers really arose, however, and American companies began to see the potential for outsourcing overseas. After Y2K the IT service industry exploded, with American companies outsourcing everything from data entry to customer service to India and other Asian countries.

India was a natural choice for outsourcing. Many American technology companies were either created by or employ non-resident Indians (NRIs) or Indian-Americans who still have strong ties to family and friends in India. This cultural bridge combined with the vast pool of cheap, technically skilled, English-speaking engineering talent produced by India's engineering colleges creates the perfect environment for information technology.

Despite its distinct advantages for companies looking to outsource their IT services, India's volatile political climate and rampant corruption present problems. Some of the 185 Fortune 500 companies that outsource software to Asia are choosing places like Vietnam or China with more predictable politics and less corruption. Other companies that outsource their customer service are finding that their customers prefer the Americanized English of the Philippines to the British English that predominates in India, though all of these countries have their drawbacks, from censored Internet lines in China and Vietnam to Muslim militancy in the Philippines.

Despite the hiccups the IT service industry continues to grow as the software industry becomes more competitive and U.S. companies try to reduce overhead. The Asian IT service market is still in its infancy, but by 2008 industry think tank Nasscom-McKinsey predicts a $17 billion IT service industry in India alone.


Reference:
http://www.cyfuture.com/definition-of-outsourcing.htm
http://www.outsource2india.com/why_outsource/articles/benefit_outsourcing.asp










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Joseph Ethel Valdez

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PostSubject: Re: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Mon Aug 24, 2009 3:41 pm

In recent years has been a significant increase in the incidence of information system (IS) outsourcing. Technological uncertainly, cost reduction, the need to concentration in the core business, and the increasing quality and competition among a growing cadre of service providers (e.g.) are often discuss as key outsourcing motivators. Cadre is a core group who is a controlling or representative group at the center of an organization.

IS outsourcing involves multiple facets, including the initial decision, choice of governance structure and the management of the ongoing relationship.

Outsourcing

"Outsourcing" is: "A company or person that provides information; to find a supplier or service, to identify a source". It is very important to be clear about what is meant by outsourcing. Outsourcing essentially refers to how things are done rather than what is done. It describes how for example IT services are obtained; not what the services are.

Very simply outsourcing can be defined as a process in which a company delegates some of its in-house operations/processes to a third party. Thus outsourcing is a contracting transaction through which one company purchases services from another while keeping ownership and ultimate responsibility for the underlying processes. The clients inform their provider what they want and how they want the work performed. So the client can authorize the provider to operate as well as redesign basic processes in order to ensure even greater cost and efficiency benefits.

Although the above definition of outsourcing may seem very similar to contracting, it is to be said that contracting and outsourcing are in no way related. Generally in contracting the ownership or control of the operation or process being contracted is with the parent company, whereas in outsourcing the control of the process is with the third party instead of the parent company. So in other words, outsourcing can be defined as phenomena in which a company delegates a part of its in-house operations to a third party with the third party gaining full control over that operation/process.

One way of looking at it is that outsourcing is just a name for already existing practices. Services such as, bureau services, contract programming and project management have been outsourced for a long time. In its present meaning, however, outsourcing refers to a greater level of handing over ownership and/or managerial control than has before been the case.

Companies turn to resources outside their organizational structure usually to save money and/or make use of the skilled professionals. For instance, a company might outsource its IT management because it is cheaper to contract a third-party to do so than it would be to build its own in-house IT management team. Or a company could outsource all of its data storage needs because it is easier and cheaper than buying and maintaining its own data storage devices. A business might also outsource its human resource tasks to another enterprise instead of having its own dedicated human resources staff.

Insourcing

Insourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced. An example is the use of in-house engineers to write technical manuals for equipment they have designed, rather than sending the work to an outside technical writing firm. In this example, the engineers might have to take technical writing courses at a local college, university, or trade school before being able to complete the task successfully. Other challenges of insourcing include the possible purchase of additional hardware and/or software that is scalable and energy-efficient enough to deliver an adequate return on investment (ROI).

Insourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is insourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.

Views

As a student, if I were invited by the Dean of the Institute of Computing to attend a seminar-workshop on information systems planning with some of the faculty members. In one of the sessions, a discussion of outsourcing came up. You have been asked to present your evaluation about outsourcing the information systems functions of the school. I would choose outsourcing because of its lower wages and operating costs both contributed to these reduced costs.

These lower costs were appealing because they greatly improved the profit margins for any organization. However, outsourcing is now gaining in popularity for a variety of other reasons. While cost reduction is still a primary advantage, other elements such as access to industry experts, a larger workforce and more flexible options are being embraced as welcomed advantages offered by outsourcing.

Outsourcing must be done carefully, systematically, and with explicit goals. Companies that rush into outsourcing without fully understanding what they hope to gain may find themselves mired in a contractual battle with a chosen vendor or the recipient of services that worsen rather than improve. Sensible reasons to consider outsourcing include both strategic and tactical concerns on both a department and organizational level.
Outsourcing might be justifiable for a department with high costs that cannot be reduced or a lack of competency in specific areas. Organizational needs that generate consideration of outsourcing include the ability to compete globally with global services or relief from financial pressures achieved through immediate cost saving.
Outsourcing is not an excuse to wash management's hands of a poorly managed, costly, or misunderstood function. Understand the costs of a function and manage it effectively before evaluating its potential for outsourcing. Otherwise, you are probably deciding to outsource for the wrong reason, you may be giving the outsourcing vendor gains you could have reaped, and you may be starting a relationship that is destined to fail.

Organizations should consider (or reconsider) the overall merits of selective outsourcing every three to four years. Revisiting outsourcing may be particularly relevant under changing market conditions or when internal, industry, or technology changes have occurred.

Use a Methodical Approach


The process of deciding whether outsourcing is warranted involves numerous steps or phases. These are: identifying requirements; preparing and distributing a request for proposal (RFP); examining proposals; evaluating vendors; negotiating contracts; and implementing outsourcing. Adopt a methodology that describes the various steps to be performed and lays out the project plan necessary for a thorough evaluation. Just as applications development activities should be guided by a written, explicit methodology, the effort to consider and possibly implement outsourcing should be systematically conducted and documented.

The various phases are as follows:
•Planning Phase. The objectives and scope of the outsourcing idea are defined and the feasibility of outsourcing is determined before a decision to proceed. The effort is planned in terms of time, budget and resources needed.

•Analysis Phase. Baselines are determined and the service levels required of vendors are specified. Relationships between the information system function(s) to be outsourced and other functions that will remain in-house are also clarified so that contracts with vendors are certain to include proper interfaces with in-house services. The request for proposal is developed, responses are collected from vendors and analyzed, and a vendor is chosen.

•Design Phase. Negotiations proceed with the vendor and a contract is developed and signed.

•Implementation Phase. The transition from in-house provision of services to outsourcing is made.

•Operations Phase. The outsourcing relationship with the vendor is managed and any maintenance or changes in the outsourcing relationship are negotiated and implemented.

•Termination Phase. At the end of the contracting period the decision is made to negotiate another contract with the vendor or a new vendor, and the cycle begins again. Alternatively, a decision is made to bring the function back inside the organization.

As you evaluate your choices and decisions in outsourcing different components of your operations, you will need to consider the advantages of outsourcing. When done for the right reasons, outsourcing will actually help your company grow and save money. There are other advantages of outsourcing that go beyond money. Here are the top seven advantages of outsourcing.

1. Focus On Core Activities
In rapid growth periods, the back-office operations of a company will expand also. This expansion may start to consume resources (human and financial) at the expense of the core activities that have made your company successful. Outsourcing those activities will allow refocusing on those business activities that are important without sacrificing quality or service in the back-office.

Example: A company lands a large contract that will significantly increase the volume of purchasing in a very short period of time; Outsource purchasing.

2. Cost And Efficiency Savings

Back-office functions that are complicated in nature, but the size of your company is preventing you from performing it at a consistent and reasonable cost, is another advantage of outsourcing.

Example: A small doctor’s office that wants to accept a variety of insurance plans. One part-time person could not keep up with all the different providers and rules. Outsource to a firm specializing in medical billing.

3. Reduced Overhead

Overhead costs of performing a particular back-office function are extremely high. Consider outsourcing those functions which can be moved easily.
Example: Growth has resulted in an increased need for office space. The current location is very expensive and there is no room to expand. Outsource some simple operations in order to reduce the need for office space. For example, outbound telemarketing or data entry.

4. Operational Control
Operations whose costs are running out of control must be considered for outsourcing. Departments that may have evolved over time into uncontrolled and poorly managed areas are prime motivators for outsourcing. In addition, an outsourcing company can bring better management skills to your company than what would otherwise be available.

Example: An information technology department that has too many projects, not enough people and a budget that far exceeds their contribution to the organization. A contracted outsourcing agreement will force management to prioritize their requests and bring control back to that area.

5. Staffing Flexibility
Outsourcing will allow operations that have seasonal or cyclical demands to bring in additional resources when you need them and release them when you’re done.

Example: An accounting department that is short-handed during tax season and auditing periods. Outsourcing these functions can provide the additional resources for a fixed period of time at a consistent cost.

6. Continuity & Risk Management
Periods of high employee turnover will add uncertainty and inconsistency to the operations. Outsourcing will provided a level of continuity to the company while reducing the risk that a substandard level of operation would bring to the company.

Example: The human resource manager is on an extended medical leave and the two administrative assistants leave for new jobs in a very short period of time. Outsourcing the human resource function would reduce the risk and allow the company to keep operating.

7. Develop Internal Staff
A large project needs to be undertaken that requires skills that your staff does not possess. On-site outsourcing of the project will bring people with the skills you need into your company. Your people can work alongside of them to acquire the new skill set.

Example: A company needs to embark on a replacement/upgrade project on a variety of custom built equipment. Your engineers do not have the skills required to design new and upgraded equipment. Outsourcing this project and requiring the outsourced engineers to work on-site will allow your engineers to acquire a new skill set.


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PostSubject: Re: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Mon Aug 24, 2009 4:11 pm

The decade of the 1990s was one of constraint for higher education. Declining student enrollments, state budget cuts, decreased funding for research, and increased pressure to limit tuition growth resulted in diminished revenue sources for colleges and universities (Ender and Mooney, 1994). To remain competitive and to improve service in the face of declining resources, higher education has increasingly turned to several popular management approaches, including outsourcing (Jefferies, 1996).

Outsourcing, also referred to as contracting, is a form of privatization that refers to a university's decision to contract with an external organization to provide a traditional campus function or service. The contractor then either takes over the employees of the university, paying the group according to its standards, or replaces the university employees with its own staff (Ender and Mooney, 1994).

Outsourcing assumes that if an institution cannot provide a service or product at less cost than, and of equal quality to, an external provider, then it should purchase the service or product from an external provider. Advocates of outsourcing argue that the private sector provides service more efficiently and at lower cost than the public sector, which is unmotivated by profit (Jefferies, 1996). They point out that outsourcing to a contractor can reduce a college's or university's labor and benefits costs, provide a single point of accountability, and provide predictable costs; the resulting savings allows the institution to focus more resources on its core educational operations -- teaching and research (Ender and Mooney, 1994). Colleges and universities are testing these theories, increasingly outsourcing more of their functions in an effort to reduce costs, increase service efficiencies, and boost income (Jefferies, 1996).

WHAT FUNCTIONS ARE BEING OUTSOURCED?

Outsourcing has traditionally been used to operate campus bookstores and dining services. It has more recently become a legitimate option for additional campus functions, including facilities operation, computer services, security, child care, residence halls, teaching hospitals, remedial classes, and even entire institutions (Goldstein, Kempner, Rush and Bookman, 1993; Gilmer, 1997).

To some observers, there seems to be an announcement every week about a college being among the first to outsource an operation (van der Werf, 2000). For example, the University of Miami recently contracted with Strategic Distribution, Inc., to acquire all materials required for repair, maintenance, and operations at its main campus and medical center; Chatham College hired a contractor to run its library and hire most of the library staff (van der Werf, 2000).

PROBLEMS WITH OUTSOURCING

Critics of outsourcing point out its human resource consequences. Jobs may be shifted from the college or university to the contractor performing the outsourced function, which may result in decreased salaries or benefits (Gilmer, 1997).
A recent experience at The University of North Carolina is a case in point. The University planned to outsource its housekeeping staff; consultants expected the contractors to pay the housekeeping staff less and to provide fewer benefits than the University offered them. The plan ultimately led to charges of racism since, in contrast to other University employees, the housekeeping staff was predominantly African-American (Gilmer, 1997).

Other critics feel that contract staff may have less loyalty to the university than if they were employed directly by the institution and express disappointment with the resulting inadequate service by contractors. Inadequate service by contractors can affect the campus community in myriad ways; uncomfortable teaching facilities, shortages of textbooks in the campus bookstore, and lack of skilled technical staff to manage computer networks are just a few possibilities.
Ender and Mooney (1994) suggest that the greatest barrier to outsourcing is lost jobs and the resulting negative impact on institutional morale. They offer a set of guidelines for mitigating the negative impact of outsourcing:

1) outsource management personnel only,
2) downsize the staff by attrition,
3) involve employees in selecting the contractor, and
4) re-bid the contract often.

Filling senior management positions with contract staff for a defined period of time, they say, can eliminate conflict inherent in outsourcing an entire operation. Existing staff can remain with the university while receiving training that may eventually enable them to move into the outsourced management positions.

OUTSOURCING SUCCESS STORIES

According to Manuel Cunard, executive director of the National Association of College Auxiliary Services, college outsourcing is growing so quickly that there has been very little time to step back and determine its effectiveness (van der Werf, 2000).

The privatization of college services is currently chronicled primarily through anecdotal evidence, and campuses nationwide continue to debate the merits of outsourcing (Gilmer, 1997).

Though research about outsourcing is scanty, anecdotal evidence does make it clear that many institutions have found outsourcing to be an effective means of reducing costs, assuring financial results, upgrading program quality, gaining access to special expertise, increasing customer satisfaction, and obtaining capital for facility improvements (Dillon, 1996).

George Mason University in Fairfax, Virginia and the University of Tennessee at Knoxville are two institutions that have used outsourcing to advantage. George Mason University is one of the nation's most aggressive contractors. The University has contracts, totaling more than $30 million, for 50 campus services and operations (Gilmer, 1997).
The University of Tennessee at Knoxville contracts for the installation of blinds, carpet, ceilings, fences, and elevator maintenance. The University saves an estimated $565,000 per year through outsourcing all of its custodial services (Gilmer, 1997).

RETHINKING OUTSOURCING

Some institutions have outsourced campus functions only to realize that outsourcing was not the panacea they had hoped it would be. Consistency and cost issues were key in Whitworth College's decision to abandon outsourcing. The College virtually eliminated its communications office in the late 1980s when it outsourced the office, reducing its staff from seven to one. In 1992, a presidential task force reevaluated the situation and the College returned to a centralized on-campus communications shop. Lack of coordination was cited as the major problem with outsourcing, with wide gaps in quality and cost the result. The administration ultimately realized the importance of coordinated communications to the College's success since the communications office was tied into fund raising, alumni relations, recruitment and all other facets of campus life (Schreiber, 1994).

The University of Pennsylvania recently scaled back its contract with the Trammel Crow Company for operations and maintenance of its campus buildings. Professors at the University say housekeeping functions never improved and roofs still leaked. Penn and company officials agreed that the key flaw in the school's outsourcing strategy was that Trammell Crow was asked to maintain buildings in such bad repair that they were essentially unmaintainable (van der Werf, 2000)

HOW WIDESPREAD IS OUTSOURCING?

Statistics about outsourcing in higher education are few, but the need for such data has been recognized. The National Association of College Auxiliary Services has recently opened a center to try to track overall figures for outsourcing in higher education (van der Werf, 2000).

Gilmer (1997) reports that a 1996 survey by American School & University found that colleges and universities are increasingly turning to outsourcing. More than one-half expect to contract for more services in the coming years. Only 5.9% of colleges and universities produce all services in-house; 62.4 % of colleges contract for four or fewer services; 31.7 % outsource five or more services. The most popular outsourced services include food (74.3%), vending (65.3%), bookstore operations (33.7%), custodial work (30.7%), and laundries (18.8%). Recent figures also show that the building of on-campus housing by private companies was a $500 million business in 1999, with no indication of a decrease in 2000 (van der Werf, 2000).

HOW SHOULD MANAGEMENT DECIDE WHETHER TO OUTSOURCE?

Whether or not to outsource a function is not an institution's most important question. Instead, management should examine the full array of options and select the operating and management approach best for the institution. Focusing first on understanding how the functional area in question is currently operated and examining all its strengths and weaknesses enables the institution to make a fully informed choice. (Goldstein, Kempner, Rush and Bookman, 1993). A core set of issues and questions must be explored when institutional management is deciding whether to outsource any function. Rush, Kempner and Goldstein (1995) group these core "decision factors" into six categories:

1) Human Resources - How employees will be affected.
2) Financial - The direct and indirect cost to the institution.
3) Service Quality - How each alternative will meet campus needs.
4) Legal and Ethical Considerations - The level of risk and potential liability posed by each option, any tax ramifications, any potential conflicts of interest.
5) Mission and Culture - The effects of choosing an option inconsistent with the institution's culture and historical mission.
6) Management Control and Efficiency - The likely effect of each option being considered on the institution's ability to control the direction and priorities of the functional area.

The relative importance of these six decision factors will vary with the institution and among functional areas. However, regardless of the institution's size, location or affiliation, and no matter what functional area is under consideration, campus decision makers need to use a structured methodology when making the decision to outsource. Rush, Kempner and Goldstein (1995) also offer a ten-phase methodology for outsourcing which focuses on the following actions:

Phase 1: Identify Key Participants
Phase 2: Develop an Analytical Framework
Phase 3: Assess the Current Environment
Phase 4: Identify Customer Requirements
Phase 5: Develop an Operational Design
Phase 6: Identify Possible Alternatives
(Peterson's Contract Services for Higher Education (1995) provides information on various types of contract and outsourcing services available to colleges and universities.)
Phase 7: Review Legal, Ethical, and Community Considerations
Phase 8: Compare Proposed Operating Alternatives
Phase 9: Select the Preferred Alternative
Phase 10: Establish a Continuous Improvement and Assessment Process

CONCLUSIONS

The growing use of outsourcing in higher education reflects a general acceptance by campus administrators that it will reduce costs while continuing to provide essential university services (Jefferies, 1996).
Successfully outsourcing a function requires careful, comprehensive evaluation and planning by management. The answer to whether or not to outsource is what best serves the institution--not only what is most cost efficient, but also what will provide the most consistency, timeliness and overall quality in meeting the college's or university's goals (Schreiber, 1994).

To outsource or not outsource - strategic decision making

Conventional wisdom regarding the outsourcing decision states that you should outsource your "non-core" business activities. The difficulty with this approach, however, is that it provides no guidance for deciding which activities are "non-core". Ultimately, in many organizations adopting this approach, the discussion about what is "core" and what is "non-core" ends up being highly subjective, and in the end, one person?s opinion ends up prevailing over another?s. A better approach, and the one that Price Waterhouse Coopers typically adopts in advising clients about the outsourcing decision is to look at the decision in terms of a two-by-two matrix, as shown below.

I consider the outsourcing decision along two dimensions. The first, Strategic-Non Strategic, considers how important the activity proposed for outsourcing is to the organization in achieving long term strategic competitive advantage in its chosen marketplace. In terms of maintenance, this will clearly vary from organization to organization, depending on the industry that it competes in, and its chosen strategy for competing in that industry. For example, for a contract mining organization, where competitive advantage in the industry is largely driven by being the lowest cost producer (and in which maintenance and asset ownership costs typically equate to 55-60% of total costs), maintenance clearly is of strategic competitive importance to the firm. Outsourcing maintenance in this environment would, in effect, be handing over control of this potential source of competitive advantage to an external party. On the other hand, maintenance to a hospital may be of less strategic importance, and therefore could, potentially be a candidate for outsourcing. The second dimension, Competitive-Non Competitive, relates to how competitively the function being considered for outsourcing is currently being performed compared to the external competitive marketplace. This relates primarily to the cost of the service, but could also be extended to include service elements such as response time.

Putting the two elements together gives four possible outcomes.

1. Those functions that are of Strategic importance to the firm, and which are currently being performed competitively require no further action - the status quo should be retained.
2. Those functions that are of Strategic importance to the firm, but which are not currently being performed competitively with the external marketplace should not (in the long run) be outsourced. Instead, a better long-term option is to re-engineer them to ensure that they are performed at a competitive cost. It is possible that, as an interim measure to speed the transition process, a tactical decision is made to outsource the function in the short term, but as stated previously, in the long term the function, as a source of potential competitive advantage, should be retained in-house.
3. Those functions that are not of Strategic importance to the firm, and which are not currently being performed competitively with the external marketplace should be outsourced. There is little value in investing in improving this function.
4. The final combination, those functions that are not of Strategic importance to the firm, but which are being performed competitively with the external marketplace is more interesting. A number of options exist for this function, including
o selling the function as a going concern,
o extending the function to provide services to external customers,
o outsourcing the function, or
o raise the profile of the function to turn it into a source of strategic competitive advantage.

The preferred option depends largely on the function being considered. Does a competitive outsourcing market exist?

A second consideration for outsourcing, that is related to the above model, is to decide whether a competitive market for the outsourced services actually exists. In particular, when dealing with highly specialized maintenance services (such as specialized turbine maintenance) or maintenance occurring in remote areas (such as at remote mine sites), once an outsourced maintenance service provider has been selected, this may create large barriers to entry for other potential maintenance service providers wishing to enter into this market. While these barriers may be overcome, by adopting an appropriate outsourcing strategy (such as letting work to two or more contractors, rather than to one exclusively), awareness of this possible outcome prior to establishing the outsourcing strategy is vital if the outsourcing organization is not to find itself "locked in" to a sole provider. How much maintenance to outsource

An important consideration in making the maintenance outsourcing decision is what aspects of maintenance to outsource. If we consider the maintenance management process as consisting of six major steps, as shown below, then a number of options exist.

A World Class Maintenance Management System

In the first instance, organizations may choose simply to outsource the work execution step, while retaining the remaining steps inhouse. This is often done on a limited basis, for example, when employing contractors to supplement an inhouse work force during times of high workload, during major shutdowns, for example. This is the minimalist approach to outsourcing.

An alternative approach is to outsource all of the above activities with the exception of the analysis and work identification steps. In this approach, the contractor is permitted to plan and schedule his own work, and decide how and when work is to be done, but the outsourcing organization retains control over what is to be done.

A third approach is to outsource all of the above steps, thus giving control over the development of equipment maintenance strategies (ie Preventive and Predictive Maintenance programs) to the contractor. In this instance, the contract must be structured around the achievement of desired outcomes in terms of equipment performance, with the contractor being given latitude to achieve this to the best of his ability.

There are advantages and disadvantages to each approach, and the most appropriate approach will depend on the client?s particular situation.

Looking at how maintenance fits into the wider asset management strategy of an organization (as illustrated below) also raises interesting challenges.

For example, one challenge that needs to be met is how the maintenance contractors will interface with the production operators, and the relative responsibilities and duties of each party. Many organizations today are adopting Total Productive Maintenance principles, which encourage Production operators to take a higher level of responsibility for equipment performance, and also encourage them to perform many minor maintenance tasks. There is also a growing realization that the manner in which equipment is operated can have a huge bearing on maintenance costs and the maintenance activities required to be performed if equipment performance targets are to be met. A high level of teamwork between the Maintenance contractors and the Production operators is, therefore, vital to the successful completion of the contract. This leads to the view that an alternative, and possibly better, approach to the outsourcing of maintenance is to include plant operation in the scope of the contract. Hence the letting of Operations and Maintenance contracts, particularly in the Power Generation industry.

Finally, taking things one step further again, there is also a growing realization that maintenance is limited in achieving higher equipment performance by the fundamental design of the equipment being maintained. The best that maintenance can achieve is the inherent reliability and performance of the equipment that is built in by design. There is, therefore, a school of thought that says that the best way to overcome this limitation, in an outsourcing environment, is to also give the contractor responsibility for the design of the equipment. This can be done either by giving him responsibility for ongoing equipment modifications, or by giving him responsibility for the initial design of the equipment, as in a BOOM (Build, Own, Operate and Maintain) contract, which is gaining favor in many infrastructure projects. Establishing an appropriate tendering process

The tendering process for a major outsourcing contract is likely to be different to the contracting process for major capital works in a few key aspects.

Of particular importance will be the explicit consideration of risk at various key points in the contracting process, and the identification of appropriate strategies for managing those risks. These could take the form of either shaping or hedging actions. Shaping actions are those action undertaken to minimize the likelihood of the risk factor occurring. Hedging actions are those actions undertaken to minimize the impact of the risk factor, should it occur. In addition, the evaluation criteria for the selection of an appropriate maintenance contractor are likely to be quite different from those for a major capital project. It is likely that significant work will be required to develop appropriate criteria, and to ensure that sufficient information is obtained from tenderers to be able to make an informed decision.

Establishing an appropriate specification of requirements

The specification of requirement during the tendering process will need to be carefully considered. In particular, for those contracts involving large-scale outsourcing of most maintenance functions, there will be a requirement to ensure that the requirements specification is outcome-based, rather than input-based. In other words, the specification will need to detail what is to be achieved from the contract, not how it is to be achieved, or what inputs will be required for its achievement. In Price Waterhouse Coopers' experience, ensuring that all the required outcomes are specified is a major undertaking. Agreeing how the achievement of all of these outcomes will be measured is also, potentially, a huge undertaking. For example, in one recent outsourcing contract, a desired outcome was the achievement of long-term plant integrity. Deciding how to measure that was a difficult process.

Establishing an appropriate contract payment structure

There are a number of alternative contract payment structures. These include:

• Fixed or Firm price
• Variable Price
• Price ceiling incentive
• Cost plus incentive fee
• Cost plus award fee
• Cost plus fixed fee
• Cost Plus Margin

Each of these price structures represents a different level of risk sharing between the contractor and the outsourcing organization, and a number of considerations will need to be made in determining the most appropriate payment structure. These include:

• The extent to which objective assessment of contract performance is possible
• The ease with which realistic targets can be set for contractor performance
• The administrative effort involved with each payment option

The degree of certainty with which the desired contract outcomes can be specified

Transition arrangement may be put in place to gradually transfer the payment structure from one method to another over time, as a greater degree of certainty over the requirements of the contract, and more accurate knowledge of target levels of performance is established. Establishing an appropriate contract administration process and structure Before the contract is let, the client will need to have decided on the appropriate contract administration process, and the roles and responsibilities of his own staff in managing the contract. He will also need to establish the structures, processes and equip his people with the skills to perform the required duties. We have seen many potentially successful outsourcing contracts fail, simply because the client did not manage those contracts effectively.

Establishing an appropriate structure for the contract document

In our experience, most standard contracts in place at most organizations, are not appropriate for large outsourcing contracts. Many Standard Terms and Conditions are inappropriate for large, long-term service-related contracts - particularly those that are of a partnering or gain-sharing nature. We have found that it is best to combine Special Conditions of Contract with revised Standard Conditions of Contract to develop a new contract structure that is appropriate for the particular contract being let. Managing the transition to the outsourced arrangement

There are many issues to be addressed by the outsourcing organization in the transition to the new arrangements. Among these are matters such as:

• Staff - which will be retained by the organization, which will be employed by the contractor, which will be let go?
• Drawings - who has responsibility for ensuring that drawings are kept up to date, who will be the custodian of site drawings?
• Computer systems - will the contractor have access to the client?s Computerized Maintenance Management system? Will they maintain their own computerized Maintenance records? Who is responsible for ensuring that all data in the Computerized Maintenance Management systems are accurate?
• Materials Management - will the contractor provide his own materials, or will the client provide these?
• Workshop facilities and tools - who owns and maintains these?

Agreeing contract termination arrangements

Another critical issue that needs to be addressed before the contract is let, is how the situation will be managed if the decision is made to terminate the existing contract. In particular, agreement needs to be reached regarding the duties and obligations of the outgoing contractor in handing over to the incoming contractor (or the client organization, should they decide to bring maintenance back in-house).

Conclusion

While these are some of the major considerations for organizations considering outsourcing maintenance, there are many others that cannot be covered in this paper due to restrictions in time and space. Needless to say, the decision to outsource any major function, such as maintenance, is not one that should be taken lightly, and careful consideration of all major issues is vital, if the transition to contracted maintenance is to be smooth and satisfactory to both parties.

http://www.ericdigests.org/2001-3/outsourcing.htm

http://www.maintenanceresources.com/referencelibrary/maintenancemanagement/outsourcing.htm#section1

My Blog: http://etelur.blogspot.com/2009/10/mis-assignment-8.html




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jojimie

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PostSubject: Re: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Tue Aug 25, 2009 1:47 pm



OUTSOURCING

In the recent times there have been lots of speculations and negative criticisms against Outsourcing to offshore destinations. But it has to be noted that outsourcing as a phenomena is not new but has been going on since ages. If one looks at the outsourcing history one can realize that since ancient time’s companies in developed countries have outsourced services to nearby less developed counties.
Before the IT revolution, many companies in the US outsourced manufacturing jobs to countries like Canada, Mexico and South America in order to cut costs. Many even set up separate workstations and factories in these regions. The only difference between then and now can be seen in the frantic pace at which things are happening. Also as manufacturing jobs involved solid goods they needed to be transported that gave rise to a different kind of employment opportunity. IT outsourcing does not involved any transportation from the manufacturing destination to the client\'s place. Apart from these differences outsourcing history seems to be quite an old thing.

WHAT IS OUTSOURCING

It involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. 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 like telemarketing, customer services, market research, manufacturing and engineering.

IMPORTANCE OF OUTSOURCING

Business services outsourcing includes a wide variety of businesses that offer services to other businesses on an outsourced basis that can comprise of accounting, receivables collection, benefits administration, HR administration, recruiting, training, security and computer-related services.
This industry is one of the three major industries in the United States that has seen a major growth in the last decade due to recent technological developments.
As organizations have become more comfortable with the benefits of outsourcing transactional processes, they have progressively started to outsource higher value-added services and more comprehensive processes for example, they move from outsourcing just one, discrete function to outsourcing an entire end-to-end process (from accounts payable to complete finance and accounting operations, from payroll to entire HR operations).

OUTSOURCING - ADVANTAGE


One of the most effective marketing tools to maximize profit is outsourcing which is a contract or dealing from an outside supplier or source. With its various advantages and benefits, a lot of companies have already adopted this kind of strategy which maximizes profits and minimizes losses.
Outsourcing allows companies to avail the same level of quality service at a much lower price. For example, call center services and medical billing outsourced to countries such as Philippines and India will allow companies to save almost 50 to 60 percent of the original total cost. Another financial benefit of outsourcing is that entrepreneurs can save capital expenditure and training cost.
With this cost-effective strategy, companies can save time, manpower, infrastructure, and other expenditures, and since there is no need to build infrastructure, repair and maintenance costs can be avoided. With this financial benefit, companies can focus more on its core business by investing on equipment, technologies, software, and other things which can further expand the companies’ operation. In addition to this, the talents and skills provided by the employees can be focused on its specified job, also, since they have more time to concentrate on their duties, employees can further improve their skills which can help their companies to achieve its goals.
Another advantage of outsourcing is that it allows companies to avail high-quality services. In this highly-globalize world where there is tight competition among businesses, it is easy to find a good quality skilled and specialized services which can help companies further expand. Outsourcing will also allow companies to find a business partner where both of these can have a mutual benefit such as increased productivity level, improved skills and talents, enhanced efficiency level, increased level of quality, improved business performance, and increased value of the products and services.


Outsourcing- disadvantages
a.) Before deciding on outsourcing your company\'s business process, keep in mind the disadvantages of outsourcing:
b.) Less managerial control - It may be harder to manage the outsourcing service provider as compared to managing your own employees.
c.) Outsourcing company goes out of business - If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house.
d.) May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to outsourcing.
Security and confidentiality issues - If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider.


POSITIVE EFFECTS OF OUTSOURCING
• Aids globalization
• Improves the standard of living in developing countries
• Creation of good job opportunities in developing countries
• Generation of innovative low cost products in counties that outsource
• Better customer service at lower rates
• Generation of newer jobs with better pays in the long run


MAIN OUTSOURCING TRENDS FOR 2009


1.Consolidation
The end of 2008 caused aggravation of the competition between outsourcing companies. There are lots of offshore vendors nowadays and new companies emerge every day. And in the situation that has formed at the present moment a lot of outsourcing organizations are unable to survive. That\'s why experts predict some significant consolidations in the nearest future.
2. Globalization of the market
Globalization of the sector is caused by the outsourcing boom. By recent time main outsourcing countries have been considered to be India and China. They still remain, but a number of states have joined the \'outsourcing movement\', e.g. countries of Eastern Europe (Russia, Ukraine). So the outsourcing sector gains the global scale. The large number of outsourcing companies leads to the more definite specialization of outsourcing.


INSOURCING

Advantages to In-sourcing:
• Helps economy
• More jobs become available to others
Disadvantages to In-sourcing
• More expensive
• Less chance for new companies to succeed
Despite some disadvantages, there are still instance which other people take in-source into account. Wherein they find in-source a way to transform business as usual into business as exceptional. All salt-worthy executives know that the name of the game is reinvention, and those who play best win. What many don’t realize is that they can play the game a lot better, and improve their company’s performance by growing a culture of innovators from within, not by continuing to acquire innovation resources from without. If pervasive innovation is what you want, there’s only one way to get it: in-source it, and make it part of everyone’s job.

In-sourcing Innovation provides a straightforward depiction of why leading organizations are making innovation more systematic and structured.

There are also firms and organizations supporting the in-sourcing – FAIR supports efforts to “in-source” but advises a deliberate and systematic approach based on facts and analysis. The Federal Acquisition Innovation and Reform Institute (FAIR) support efforts to “in-source” critical positions and personnel so that the government possesses adequate organic capability to address the challenging and daunting tasks ahead of us. However, we recommend that the administration, Congress, and agencies proceed with caution, through a deliberate and systematic approach to in-sourcing based on facts and analysis. Agencies should also adopt realistic timelines for recruiting and integrating new personnel as well as developing new business processes, if required... Rushing to undo what has been in the making for years, perhaps decades will be counterproductive.

Guidance for in-sourcing should address the critical question of ‘inherently
governmental’ and core competencies. As the Obama administration, Congress, and agency leadership lay out guidance and legislation regarding positions that should be in-sourced, the most important questions that we should be asking are:
• What are ‘inherently governmental’ positions? Are there any currently beingperformed by contractors and if so, how can they in-sourced immediately?
• What core competencies are critical to achieving agency and program missions?
• Which positions are tied to core competencies?
• What is the right balance between government versus contractor positions (in the short term and longer term)?
• Beyond number of positions, does the government have the ability to create
• Efficient business models to deliver capability and expertise being provided by
Contractors?
• Where should government still continue to leverage government expertise and technical capabilities?? How and when should positions be in-sourced? What are critical processes and policies, such as the hiring process and the pay system, that need to be improved to attract the required number of staff?
Perhaps there are doubts turned into confusing thoughts between outsourcing and in-sourcing. In that way, we probably ask this question -- What is best for your organization?

If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers. If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverable, outsourcing is again a good option.

If your work involves production, then it would be more ideal for your organization to opt for in-sourcing, as you can save on transportation costs and exercise a better control over your project.

It is not necessary to choose outsourcing over in-sourcing or vice versa. Your organization can outsource and in-source at the same time. By outsourcing and in-sourcing simultaneously, you can have the best of what both offers and your business can get a competitive advantage!

the use of in-house personnel or an internal department to meet an organization\'s need for specific services. In-sourcing is seen as a reaction to the growing popularity of outsourcing that has not always met expectations. An in-sourcing strategy is chosen where it appears that a better service can be provided from internal resources than from an external supplier. In some cases, organizations opt for a combination of outsourcing and in-sourcing, in which external service providers work in cooperation with in-house personnel.


As a student,I prefer to choose outsourcing in such a way that I can save my time and I don't need to work hard for it.

lol!


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Ma.AnnKristineTomada

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PostSubject: Re: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Tue Aug 25, 2009 5:13 pm

I really had the hard time to decide if I should go on outsource or in-house the information systems functions of the school. So I had to search on-line to help me out with topic.
Before anything else let’s me first define in-source and out-source. And enumerate the advantages and disadvantages to help me to come to a decision.

What is Outsourcing?

Outsourcing began in the early eighties when organizations started delegating their non-core functions to an external organization that was specialized in providing a particular service, function or product. In outsourcing, the external organization would take on the management of the outsourced function.
Most organizations choose outsourcing because outsourcing offers a lot of advantages. When organizations outsource to countries like India, they benefit from lower costs and high-quality services. Moreover organizations can concentrate more on core functions once they outsource their non-core functions. Outsourcing can also help organizations make better use of their resources, time and infrastructure.
In outsourcing, the outsourcer and the outsourcing partner have a greater relationship when compared to the relationship between a buyer and a seller. In outsourcing, the outsourcer trusts the outsourcing partner with vital information. Outsourcing is no longer confined to the outsourcing of IT services. Outsourcers in the US and UK now outsource financial services, engineering services, creative services, data entry services and much more.
Most organizations are opting to outsource because outsourcing enables organizations to access intellectual capital, focus on core competencies, shorten the delivery cycle time and reduce costs significantly. Organizations feel outsourcing is an effective business strategy to help improve their business.

Outsourcing is an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house.

What is Insourcing?

The opposite of outsourcing can be defined as insourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as insourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for insourcing because it enables them to maintain a better control of what they outsource. Insourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. Insourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for insourcing in order to cut down the cost of labor and taxes amongst others. The trend towards insourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards insourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by insourcing their work rather than outsourcing it. According to recent studies, there is more wok insourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and insource work equally.

To make it shot, insourcing is a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems.

Below are the benefits we might gain from outsourcing:

• Outsourcing your non-core activities will give you more time to concentrate on your core business processes
• Offshoring 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
• Offshoring can help your organization save on capital expenditures
• By outsourcing, your company can save on management problems as your offshore partner will be managing the team who does your work
• 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.
In addition to the above mentioned benefits on outsourcing, I have here some to take on consideration:
• Ability to focus on core competencies. By handing over noncore activities to a trusted third party, a company can concentrate on activities central to its value proposition and increase its competitive positioning.
• Faster and higher-quality service and improved efficiency. Vendors’ economies of scale, combined with service level guarantees, translate into increased operational efficiency for a company. For
example, outsourcing vendors typically offer service level agreements (SLAs) for availability of at least 99.9%, and many include financial penalties for downtime. Along with higher-quality service, many
outsourcers claim to reduce cost of management by up to 25%.
• Access to new skills and technology. Outsourcing gives a company access to resources not available internally, such as modern, up-todate technology and skilled human capital.
• Greater flexibility. The flexibility gained through outsourcing helps a company react quickly to changing market conditions, fluctuating demand cycles, and increased competition.
• Staff reallocation. Personnel whose job responsibilities are reduced or eliminated by outsourcing can be reassigned to other, more strategic tasks.
• Lower long-term capital investments. In a typical IS outsourcing contract, the vendor takes ownership of and responsibility for managing all or part of the client’s IS operations or infrastructure, thus eliminating the client’s ongoing investments in computer equipment. The capital funds previously allocated for computer equipment are freed for spending elsewhere.
• Improved predictability of costs. Outsourcing provides a company with predictable yearly costs for the management of all or part of the IS infrastructure.
• Assistance with organizational changes. A third-party IT service firm can help build new infrastructures or merge two existing infrastructures during or shortly after a merger, acquisition, or
joint venture.
• Assistance with globalization. A company looking to move into international markets can rely on a global outsourcer for assistance in broadening infrastructure and operational reach.

The Disadvantages of 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
• Offshoring 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.


Below are the benefits we might gain from intsourcing:

Low risk is perhaps the primary advantage of insourcing: Direct control over the resources doing the work permits better control over the results. An internal LPM directly coordinates and manages each activity with resources that can be in nearby offices. In this model, the people doing the work also directly coordinate it.

Direct control over the localization resources can produce noticeable cost savings. At one point when employing the total out-sourcing model, we discovered we were paying for as many as six levels of management and coordination on a project—the files, instructions, and other information passed through six other people on the supplier end before reaching the linguist
doing the translation. One can easily understand why messages were so different by the time the worker received them. Direct control of the resources also allows greater flexibility over such factors as resource utilization, staff selection, and labor cost. For example, paying a higher
wage to linguistic resources may result in lower workforce turn-over, higher quality, and a greater ROI (return on investment).



Factors to consider include:

• Reduce recurring costs associated with managing a Help Desk including staffing and training
• Improve service levels and increase professionalism among Help Desk staff
• Realign your staffing as necessary
• Take advantage of existing Help Desk infrastructure and recent call management software implementation
• Predictable monthly service charge for service

• Scalable
• Company retains control
• Company owns technology and data
• Direct knowledge transfer of best practices to your company
Pros
• Scalable
• Company retains control
• Company owns technology and data
• Direct knowledge transfer of best practices to your company
• Allows 2nd Level Support to focus on more difficult technical problems


The Disadvantages of In-housing

A potential major disadvantage is the sheer volume of personnel needed to meet the localization requirement. This model can be perfectly viable when localizing into
just a few languages but becomes less so—if not economically infeasible—when localizing products into many languages.

Factors to consider include:

• Work frequency in each language – in-house personnel must have enough work on a regular
basis to remain cost effective.
• Infrastructure – in-house personnel need offices, computers, telephones, office supplies, and so forth to function properly. The key to success is keeping these resources utilized on value-add activities. Under-utilization means excess capacity that can quickly consume the savings that insourcing provides over out-sourcing.

• Will require significant staff changes
• Must invest time in management of insourcing company
• Investment in technology and process
• Facility and technology must be provided and managed by your company

Cons
• Will require significant staff changes
• Must invest time in management of insourcing company
• Investment in technology and process
• Facility and technology must be provided and managed by your company
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Ma.AnnKristineTomada

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PostSubject: Assignment 8   Tue Aug 25, 2009 5:14 pm

What is best for our organization?

Here are some tips for us to be able to decide on what to choose: insource or outsource.

• If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers.

• If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverables, outsourcing is again a good option.
• If your work involves production, then it would be more ideal for your organization to opt for insourcing, as you can save on transportation costs and exercise a better control over your project.


Hybrid Model

As I had doing my researches with this topic I had discover that we can do three approaches to project resourcing; out-sourcing (using external agencies), insourcing (using internal resources), or a combination of the two, we can called the hybrid model. Intel IT has adopted a hybrid model that combines the advantages of both out-sourcing and in-sourcing. But Intel IT uses this approach for large corporations whose documents require localization.

This approach may not applicable to our school as it stated above it is used in large corporation or big organizations or companies. But I just want it to include to this topic.

Hybrid Model

Historically, large corporations often vacillate between total out-sourcing and total in-sourcing. While these shifts may seem appropriate based on changing economic factors, constant switching adds costs and delays the return on the investment each time it occurs. Intel IT has adopted a successful hybrid approach that has helped break this cycle.

A hybrid model combines in-sourcing and out-sourcing and is configured to meet the localization project’s specific needs. We constructed the Intel Linguistic Services (ILS) as part of our localization effort. ILS consists of a large,
worldwide network of freelance linguists covering over 30 languages. ILS also maintains a few in-house linguists for the core (high demand) languages. Translators, editors, desktop publishers, and so forth populate the freelance base according to language specific needs. Most freelancers reside in the target countries to ensure their work conforms to the latest vocabulary and cultural adaptations.

The small number of in-house linguists provides overall direction, consistency, consulting, and advanced expertise in their respective languages.

Advantages

Advantages to this hybrid model include:

• High resource utilization – freelance base works on an as-needed basis, avoiding the possibility of large amounts of excess capacity sitting unused.
• Competitive cost – freelance base is PPV and allows us to directly contact the workforce, saving middle-man costs.
• Managed risk – direct access gives us greater control of the quality and timeliness of our deliverables.

We use a simple database to track all of these efforts. Our LPMs use the database to access individual name, language, contact information, quality rating, and other data. For payroll issues, we hire individual freelancers through sponsoring suppliers that handle most of the payroll activities.

Disadvantages

Managing individual assignments for so many workers is certainly more effort for the project manager than under a total out-sourcing model. Internal localization teams are responsible for understanding and handling such factors as individual availability and the no-work holidays of specific countries. This duty requires a more intensive ability and overall discipline to organize and track data than out-sourcing requires. Managing a network of freelancers also requires in depth skills in mass communication and management. At times, style guides, encryption keys, and other kinds of non-project specific information must go out to the entire network.

In a large corporate environment, a company has three models for completing its localization projects. Intel IT developed and adopted a hybrid model that combines in-house linguists with a worldwide network of freelance
resources. This combination optimizes risk management, resource utilization, and cost savings. Depending on the scope of work and number of target languages, this model may be well suited for implementation at other large companies whose content requires localization.

Conclusion:

There is a big debate going on at the moment and people are constantly arguing whether or not it is better to outsource or to insource. Even me I still get confuse with is best and preferable to apply in our school. We can mention a lot of good reasons and bad reasons for both (which I have enumerated above) but at the end of the day what is important stand in our own personal needs.

If we have to look on the stated above, the biggest benefit that insourcing has stands in the fact that you get a very close contact with the person you are hiring. And our school has the faculties and staffs that can work it on. This can create a very good working environment but at the same time it does bring in some negative aspects that we have to think about. Unfortunately sometimes we can not find what we are looking for through insourcing. This basically means that what we want done can not be found locally. Such a fact shows us the biggest advantage why outsourcing is preferred in a comparison with insourcing which has a wider set of choices. We are basically moving everything towards a much larger scale.

It is not necessary to choose outsourcing over insourcing or vice versa. Our school or organization can outsource and insource at the same time (if we can, if the school can be able to sustain that). By outsourcing and insourcing simultaneously, we can have the best of what both offers and our school can get a competitive advantage. But of course we need to take in consider the resources and budget if we have enough.
----not yet finish-----

http://www.cyfuture.com/pro-and-cons-of-outsourcing.htm
http://www.outsource2india.com/why_india/articles/outsourcing-versus-insourcing.asp
http://www.offshoringtimes.com/Pages/2007/offshore_news1444.html
http://www.webspacestation.com/it-outsourcing-news/articles/outsourcing.html
http://www.answers.com/topic/insourcing
http://dictionary.bnet.com/definition/insourcing.html

http://www.searchenginepanel.com/top-five-advantages-to-in-house-link-building/
http://www.outsource2india.com/why_outsource/articles/benefit_outsourcing.asp
yehey...na add nanku xa.....cenxa poh..


Last edited by Ma.AnnKristineTomada on Fri Sep 04, 2009 3:34 pm; edited 2 times in total (Reason for editing : I had not included my references to this topic..(un lnag jud ang kulang )...chUriE poH!...)
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♥ilyn_mapalo♥

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PostSubject: Re: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Thu Aug 27, 2009 7:47 am

As a student, you were invited by the Dean of the Institute of Computing to attend a seminar-workshop on information systems planning with some of the faculty members. In one of the sessions, a discussion of outsourcing came up. You have been asked to present your evaluation about outsourcing the information systems functions of the school.

Required:

You are to take a position- outsource or in-source and justify your position. (3000words)

Arrow Information systems are what the companies, organizations and even schools need to understand deeply for it is very needed and important in order to have an organize and well managed business. And in that matter, to make a certain system be effective, efficient and especially friendly user, the system should be well define and proven to be trusted to avoid leakage.

Arrow Let’s first define the two, outsourcing and in-source. Says from wiki that outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. Out sourcing in the information technology field has two meanings. One is to commission the development of an application to another organization, usually a company that specializes in the development of this type of application. Meaning, a certain company or organization is purchasing a software usually a package one with services free like maintenance depending on their services. But some software companies are providing a 24 hour services so that everytime there's something wrong with the software, they can contact and ask for an advice what to do.The other is to hire the services of another company to manage all or parts of the services that otherwise would be rendered by an IT unit of the organization. The decision to outsource is often made in the interest of lowering cost or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particularbusiness , or to make more efficient use of land, labor, capital, (information) technology and resources.

Arrow As you evaluate your choices and decisions in outsourcing different components of your operations, you will need to consider the advantages of outsourcing. When done for the right reasons, outsourcing will actually help your company grow and save money. There are other advantages of outsourcing that go beyond money. Here are the top seven advantages of outsourcing.

1. Focus On Core Activities
In rapid growth periods, the back-office operations of a company will expand also. This expansion may start to consume resources (human and financial) at the expense of the core activities that have made your company successful. Outsourcing those activities will allow refocusing on those business activities that are important without sacrificing quality or service in the back-office.
Example: A company lands a large contract that will significantly increase the volume of purchasing in a very short period of time; Outsource purchasing.
2. Cost And Efficiency Savings
Back-office functions that are complicated in nature, but the size of your company is preventing you from performing it at a consistent and reasonable cost, is another advantage of outsourcing.
Example: A small doctor’s office that wants to accept a variety of insurance plans. One part-time person could not keep up with all the different providers and rules. Outsource to a firm specializing in medical billing.
3. Reduced Overhead
Overhead costs of performing a particular back-office function are extremely high. Consider outsourcing those functions which can be moved easily.
Example: Growth has resulted in an increased need for office space. The current location is very expensive and there is no room to expand. Outsource some simple operations in order to reduce the need for office space. For example, outbound telemarketing or data entry.
4. Operational Control
Operations whose costs are running out of control must be considered for outsourcing. Departments that may have evolved over time into uncontrolled and poorly managed areas are prime motivators for outsourcing. In addition, an outsourcing company can bring better management skills to your company than what would otherwise be available.
Example: An information technology department that has too many projects, not enough people and a budget that far exceeds their contribution to the organization. A contracted outsourcing agreement will force management to prioritize their requests and bring control back to that area.
5. Staffing Flexibility
Outsourcing will allow operations that have seasonal or cyclical demands to bring in additional resources when you need them and release them when you’re done.
Example: An accounting department that is short-handed during tax season and auditing periods. Outsourcing these functions can provide the additional resources for a fixed period of time at a consistent cost.
6. Continuity & Risk Management
Periods of high employee turnover will add uncertainty and inconsistency to the operations. Outsourcing will provided a level of continuity to the company while reducing the risk that a substandard level of operation would bring to the company.
Example: The human resource manager is on an extended medical leave and the two administrative assistants leave for new jobs in a very short period of time. Outsourcing the human resource function would reduce the risk and allow the company to keep operating.
7. Develop Internal Staff
A large project needs to be undertaken that requires skills that your staff does not possess. On-site outsourcing of the project will bring people with the skills you need into your company. Your people can work alongside of them to acquire the new skill set.
Example: A company needs to embark on a replacement/upgrade project on a variety of custom built equipment. Your engineers do not have the skills required to design new and upgraded equipment. Outsourcing this project and requiring the outsourced engineers to work on-site will allow your engineers to acquire a new skill set.

Ref: http://operationstech.about.com/od/officestaffingandmanagem/a/OutSrcAdvantg.htm

Why outsourcing?
There are many reasons why a company may choose to outsource a particular function of their business. Most managers have the end-result-in-mind that they are going to save time and/or money. Other reasons include:
Resource Shortages Relieved by Outsourcing
A particularly strong reason to outsource involves a shortage of a critical resource. This can be available employees that possess knowledge in a certain area (e.g. engineers), availability of material (e.g. petroleum or minerals) and a labor force at a level and price that will offset the cost of higher prices alternatives.
Outsourcing Provides the Ability to Concentrate On the Core Business
Some necessary, but peripheral operations are outsourced most frequently. This gives the managers the ability to concentrate on the core business issues instead of getting distracted by required, yet minor matters. A good example is a major hospital in our area that outsources its security operations to a third party company specializing in security.
Outsourcing Yields Cost Savings
The prices of labor and/or materials keep increasing and competition keeps forcing prices lower. If there is an outsourcing solution that can save your company money and overcomes the disadvantages of outsourcing, these areas should be investigated.
Outsourcing Provides Flexibility
Seasonal or cyclical demands that ebb-and-flow put varying demands on the resources of the company. An outsourcing contract could provide the flexibility needed to stabilize these varying demands. Example: A business brings in extra accountants during tax season and when being audited by the holding company that owns the business.
Reduce Overhead Costs Through Outsourcing
Some functions require a large outlay of money just to get started. This expenditure could be avoided by contracting with a third party. For example, expanding your call center’s capacity to the point where it exceeds the capabilities of your telephone system.
Common Outsourced Areas
Although many areas and functions are outsourced, here are some of the frequently outsourced areas:
Information Technology Functions
Network and Telecommunications
Human Resources and Insurance Administration
Accounting
Marketing
Security
Arrow As you evaluate your outsourcing choices, keep in mind that there are advantages to outsourcing and disadvantages of outsourcing. Look at each one of the outsourcing disadvantages listed below and decide what impact that item would have on your business. If the outsourcing disadvantages outweigh the advantages of outsourcing, then you should avoid outsourcing those operations.

1. Loss Of Managerial Control
Whether you sign a contract to have another company perform the function of an entire department or single task, you are turning the management and control of that function over to another company. True, you will have a contract, but the managerial control will belong to another company. Your outsourcing company will not be driven by the same standards and mission that drives your company. They will be driven to make a profit from the services that they are providing to you and other businesses like yours.
2. Hidden Costs
You will sign a contract with the outsourcing company that will cover the details of the service that they will be providing. Any thing not covered in the contract will be the basis for you to pay additional charges. Additionally, you will experience legal fees to retain a lawyer to review the contacts you will sign. Remember, this is the outsourcing company's business. They have done this before and they are the ones that write the contract. Therefore, you will be at a disadvantage when negotiations start.
3. Threat to Security and Confidentiality
The life-blood of any business is the information that keeps it running. If you have payroll, medical records or any other confidential information that will be transmitted to the outsourcing company, there is a risk that the confidentiality may be compromised. If the outsourced function involves sharing proprietary company data or knowledge (e.g. product drawings, formulas, etc.), this must be taken into account. Evaluate the outsourcing company carefully to make sure your data is protected and the contract has a penalty clause if an incident occurs.
4. Quality Problems
The outsourcing company will be motivated by profit. Since the contract will fix the price, the only way for them to increase profit will be to decrease expenses. As long as they meet the conditions of the contract, you will pay. In addition, you will lose the ability to rapidly respond to changes in the business environment. The contract will be very specific and you will pay extra for changes.
5. Tied to the Financial Well-Being of Another Company
Since you will be turning over part of the operations of your business to another company, you will now be tied to the financial well-being of that company. It wouldn't be the first time that an outsourcing company could go bankrupt and leave you holding-the-bag.
6. Bad Publicity and Ill-Will
The word "outsourcing" brings to mind different things to different people. If you live in a community that has an outsourcing company and they employ your friends and neighbors, outsourcing is good. If your friends and neighbors lost their jobs because they were shipped across the state, across the country or across the world, outsourcing will bring bad publicity. If you outsource part of your operations, morale may suffer in the remaining work force.

Ref: http://operationstech.about.com/od/outsourcing/tp/OutSrcDisadv.htm
Ref: http://en.wikipedia.org/wiki/Outsourcing

Arrow Insourcing is the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity that specializes in that operation. Insourcing is a business decision that is often made to maintain control of critical production or competencies. An alternate use of the term implies transferring jobs to within the country where the term is used, either by hiring local subcontractors or building a facility.Insourcing is widely used in an area such as production to reduce costs of taxes, labor (e.g., American labor is often cheaper than European labor), transportation, etc. Insourcing is loosely referred in call centers who are doing the work of the outsourcing companies.
What is Insourcing?
Arrow The opposite of outsourcing can be defined as insourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as insourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for insourcing because it enables them to maintain a better control of what they outsource. Insourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. Insourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for insourcing in order to cut down the cost of labor and taxes amongst others. The trend towards insourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards insourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by insourcing their work rather than outsourcing it. According to recent studies, there is more wok insourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and insource work equally.

Ref: http://www.outsource2india.com/why_india/articles/outsourcing-versus-insourcing.asp

What is best for an organization?
Arrow If an organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help save on time, effort, manpower and would also aid you in making quicker deliveries to the customers.
Arrow If an organization require expertise services in areas which do not fall under core competency, then outsourcing will be a good option as it can get access to expertise services. For reducing costs and making faster deliverables, outsourcing is again a good option.
Arrow If work involves production, then it would be more ideal for organization to opt for insourcing, as it can save on transportation costs and exercise a better control over your project.
Arrow It is not necessary to choose outsourcing over insourcing or vice versa. A certain organization can outsource and insource at the same time. By outsourcing and insourcing simultaneously, you can have the best of what both offers and business can get a competitive advantage!


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PostSubject: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Thu Aug 27, 2009 10:33 am

I am to present my evaluation about outsourcing the information systems functions of the school.

Required:

To take a position- outsource or in-source and justify my position.

Well...
Let us first define the involved terms...

What is ?


Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company.
Reasons for outsourcing
Organizations that outsource are seeking to realize benefits or address the following issues:[11][12][13]
• Cost savings.
• Focus on Core Business.
• Cost restructuring.
• Improve quality.
• Knowledge.
• Contract.
• Operational expertise.
• Access to talent.
• Capacity management.
• Catalyst for change.
• Enhance capacity for innovation.
• Reduce time to market.
• Commodification.
• Risk management.
• Venture Capital.
• Tax Benefit.

But more often times, OUTSOUORCING endow with quality risks. Quality Risk is the propensity for a product or service to be defective, due to operations-related issues.
Quality risk in outsourcing is driven by a list of factors:
* opportunism
* information asymmetry
* high asset specificity or
* high supplier switching costs

Apart from this quality risks mentioned, there are these disadvantages of OUTSOURCING.
• At times, it is more cost-effective to conduct a particular university procedure, rather than outsourcing it
• While outsourcing services such as enrollment processing services which involves monetary informations, our outsourcing provider will be able to see our university’s confidential information and hence there is a threat to security and confidentiality in outsourcing
• When we begin to outsource our university's procedures, we might find it difficult to manage the offshore/outsource provider when compared to managing procedures within our university
• Offshoring can create potential redundancies for our organization
• In case, our offshore service provider becomes bankrupt or goes out of business, our organization will have to immediately move our operational transactions in-house or find another outsourcing provider
• The employees or in USeP case, the faculties might not like the idea of outsourcing our processes and they might express lack of interest or lack of quality at work
• our outsourcing provider might not be only providing services for our organization. Since your provider might be catering to the needs of several companies, there might be not be complete devotion to us and our school
• In outsourcing, we may lose our 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 organizations. we might also have to spend a lot of time and effort in getting the contract signed
• With outsourcing, our school organization might suffer from a lack of customer/student 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.



Idea Idea Idea

Considering the mentioned insufficiencies of OUTSOURCING, I rather suggest that USeP would better switch to IN-SOURCE.

What is ?

The opposite of outsourcing can be defined as insourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as insourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for insourcing because it enables them to maintain a better control of what they outsource. Insourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. Insourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.

By means of INSOURCING, additional credit would be specified to faculties of IC department of the university for this will serve as praise and recognition to the teaching staff of the said department.
By all means, they are not only teaching theoretically but imparting comprehension in authentic and existent means.

Anyways, we have to trust our own professionals for they are capable enough and trustworthy for such task.

Moreover, the university can exercise a better control over our projects and procedures by insourcing.

_FIN_


Razz


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Franz Cie B. Suico

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PostSubject: Re: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Thu Aug 27, 2009 11:35 am

As a student, you were invited by the Dean of the Institute of Computing to attend a seminar-workshop on information systems planning with some of the faculty members. In one of the sessions, a discussion of outsourcing came up. You have been asked to present your evaluation about outsourcing the information systems functions of the school.

Required:

You are to take a position- outsource or in-source and justify your position. (3000words)


The message was too big..ill create a new post..

afro afro


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PostSubject: Assignment 8   Thu Aug 27, 2009 11:49 am

What is Outsourcing?

Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering cost or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of land, labor, capital, (information) technology and resources. Outsourcing became part of the business lexicon during the 1980s. It is essentially a division of labor. Out sourcing in the information technology field has two meanings one is to commission the development of an application to another organization, usually a company that specializes in the development of this type of application. The other is to hire the services of another company to manage all or parts of the services that otherwise would be rendered by an IT unit of the organization. The latter concept might not include development of new applications.

OVERVIEW

Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include information technology, human resources, facilities, real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, CAD drafting, customer service, market research, manufacturing, designing, web development, print-to-mail, content writing, ghostwriting and engineering. Off shoring is the type of outsourcing in which the buyer organization belongs to another country.

Outsourcing and off shoring are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of off shoring. Off shoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same corporation/company. With increasing globalization of outsourcing companies, the distinction between outsourcing and off shoring will become less clear over time. This is evident in the increasing presence of Indian outsourcing companies in the United States and United Kingdom. The globalization of outsourcing operating models has resulted in new terms such as near shoring, no shoring, and right shoring that reflect the changing mix of locations. This is seen in the opening of offices and operations centers by Indian companies in the U.S. and UK. A major job that is being outsourced is accounting. They are able to complete tax returns across seas for people in America. Multi sourcing refers to large outsourcing agreements (predominantly IT).[9] Multi sourcing is a framework to enable different parts of the client business to be sourced from different suppliers. This requires a governance model that communicates strategy, clearly defines responsibility and has end-to-end integration.

Strategic outsourcing is the organizing arrangement that emerges when firms rely on intermediate markets to provide specialized capabilities that supplement existing capabilities deployed along a firm’s value chain (see Holcomb & Hitt, 2007). Such an arrangement produces value within firms’ supply chains beyond those benefits achieved through cost economies. Intermediate markets that provide specialized capabilities emerge as different industry conditions intensify the partitioning of production. As a result of greater information standardization and simplified coordination, clear administrative demarcations emerge along a value chain. Partitioning of intermediate markets occurs as the coordination of production across a value chain is simplified and as information becomes standardized, making it easier to transfer activities across boundaries. Due to the complexity of work definition, codifying requirements, pricing, and legal terms and conditions, clients often utilize the advisory services of outsourcing consultants (see sourcing advisory) or outsourcing intermediaries to assist in scoping, decision making, and vendor evaluation.

Research & Development

The competitive pressures on firms to bring out new products at an ever rapid pace to meet market needs are increasing. As such, the pressures on the R&D department are increasing. In order to alleviate the pressure, firms have to either increase R&D budgets or find ways to utilize the resources in a more productive way. There are situations when a firm may consider outsourcing some of its R&D work to a contract research organizations or universities. Reasons why a firm could consider outsourcing are new product design does not work project time and cost overruns loss of key staff competitive response problems of quality/yield.

The key drivers for R&D outsourcing are emerging mass markets and availability of expertise in the field. In this context, the two most populous countries in the world, China and India, provide huge pools from which to find talent. Both countries produce over 200,000 engineers and science graduates each year. Moreover both countries are low cost sourcing countries. Other strategic drivers for outsourcing R&D are access to expertise and intellectual property, filling gaps in the capabilities of the R&D function, managing risk better, reducing the time to market, and focusing on the core competence or activities of the firm.

Reasons for outsourcing

Organizations that outsource are seeking to realize benefits or address the following issues:
Cost savings, The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through off shoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations. Focus on Core Business. Resources (for example investment, people, and infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specialized IT services companies. Cost restructuring. Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable. Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement. Knowledge Can Access to intellectual property and wider experience and knowledge. Contract Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.
Operational expertise can Access to operational best practice that would be too difficult or time consuming to develop in-house. It can also Access to talent, Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering. Capacity management can improve method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier. Catalyst for change an organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process. Enhance capacity for innovation. Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation. Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier Co modification the trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. It allows a wide range of businesses access to services previously only available to large corporations. Risk management an approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation. Venture Capital, Some countries match government funds venture capital with private venture capital for startups that start businesses in their country. Tax Benefit, Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country.



Quality Risks

Quality Risk is the propensity for a product or service to be defective, due to operations-related issues. Quality risk in outsourcing is driven by a list of factors. One such factor is opportunism by suppliers due to misaligned incentives between buyer and supplier, information asymmetry, high asset specificity, or high supplier switching costs. Other factors contributing to quality risk in outsourcing are poor buyer-supplier communication, lack of supplier capabilities/resources/capacity, or buyer-supplier contract enforceability. Two main concepts must be considered when considering observable as it related to quality risks in outsourcing: the concepts of testability and criticality.

Quality fade is the deliberate and secretive reduction in the quality of labor in order to widen profit margins. The downward changes in human capital are subtle but progressive, and usually unnoticeable by the out source/customer. The initial interview meets requirements, however, with subsequent support, more and more of the support team is replaced with novice or less experienced workers. India IT shops will continue to reduce the quality of human capital under the pressure of drying up labor supply and upward trend of salary, pushing the quality limits. Such practices are hard to detect, as customers may just simply give up seeking help from the help desk. However, the overall customer satisfaction will be reduced greatly over time. Unless the company constantly conducts customer satisfaction surveys, they may eventually be caught in a surprise of customer churn, and when they find out the root cause, it could be too late. In such cases, it can be hard to dispute the legal contract with the India outsourcing company, as their staffs are now trained in the process and the original staff made redundant. In the end, the company that outsources is worse off than before it outsourced its workforce to India.

Public opinion

There is a strong public opinion regarding outsourcing (especially when combined with off shoring) that outsourcing damages a local labor market. Outsourcing is the transfer of the delivery of services which affects both jobs and individuals. It is difficult to dispute that outsourcing has a detrimental effect on individuals who face job disruption and employment insecurity; however, its supporters believe that outsourcing should bring down prices, providing greater economic benefit to all. There are legal protections in the European Union regulations called the Transfer of Undertakings (Protection of Employment). Labor laws in the United States are not as protective as those in the European Union. [21] On June 26 2009, Jeff Immelt, the CEO of General Electric, called for the United States to increase its manufacturing base employment to 20% of the workforce commenting that the U.S. has outsourced too much and can no longer rely on consumer spending to drive demand.

to be continued.....

REFERENCES:

http://en.wikipedia.org/wiki/Outsourcing
http://en.wikipedia.org/wiki/Student_information_system




pls visit my blog...http://rs-crezaharu.blogspot.com/
afro lol!


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Jethro Alburo Querubin

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PostSubject: Assignment 8   Thu Aug 27, 2009 1:27 pm

Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company.[1] The decision to outsource is often made in the interest of lowering cost or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of land, labor, capital, (information) technology and resources
Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider.[2] The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include information technology, human resources, facilities, real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, CAD drafting, customer service, market research, manufacturing, designing, web development, print-to-mail, content writing, ghostwriting and engineering. Offshoring is the type of outsourcing in which the buyer organization belongs to another country.
Outsourcing and offshoring are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring. Offshoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same corporation/company.[3][4][5]
With increasing globalization of outsourcing companies, the distinction between outsourcing and offshoring will become less clear over time. This is evident in the increasing presence of Indian outsourcing companies in the United States and United Kingdom. The globalization of outsourcing operating models has resulted in new terms such as nearshoring, noshoring, and rightshoring that reflect the changing mix of locations. This is seen in the opening of offices and operations centers by Indian companies in the U.S. and UK. A major job that is being outsourced is accounting. They are able to complete tax returns across seas for people in America.[6][7]
Multisourcing refers to large outsourcing agreements (predominantly IT).[8] Multisourcing is a framework to enable different parts of the client business to be sourced from different suppliers. This requires a governance model that communicates strategy, clearly defines responsibility and has end-to-end integration.[9]
Strategic outsourcing is the organizing arrangement that emerges when firms rely on intermediate markets to provide specialized capabilities that supplement existing capabilities deployed along a firm’s value chain (see Holcomb & Hitt, 2007). Such an arrangement produces value within firms’ supply chains beyond those benefits achieved through cost economies. Intermediate markets that provide specialized capabilities emerge as different industry conditions intensify the partitioning of production. As a result of greater information standardization and simplified coordination, clear administrative demarcations emerge along a value chain. Partitioning of intermediate markets occurs as the coordination of production across a value chain is simplified and as information becomes standardized, making it easier to transfer activities across boundaries.
Due to the complexity of work definition, codifying requirements, pricing, and legal terms and conditions, clients often utilize the advisory services of outsourcing consultants (see sourcing advisory) or outsourcing intermediaries to assist in scoping, decision making, and vendor evaluation.

Activities for outsourcing

Research & Development

The competitive pressures on firms to bring out new products at an ever rapid pace to meet market needs are increasing. As such, the pressures on the R&D department are increasing. In order to alleviate the pressure, firms have to either increase R&D budgets or find ways to utilize the resources in a more productive way. There are situations when a firm may consider outsourcing some of its R&D work to a contract research organizations or universities. Reasons why a firm could consider outsourcing are:
• new product design does not work
• project time and cost overruns
• loss of key staff
• competitive response
• problems of quality/yield.
The key drivers for R&D outsourcing are emerging mass markets and availability of expertise in the field. In this context, the two most populous countries in the world, China and India, provide huge pools from which to find talent. Both countries produce over 200,000 engineers and science graduates each year. Moreover both countries are low cost sourcing countries. Other strategic drivers for outsourcing R&D are access to expertise and intellectual property, filling gaps in the capabilities of the R&D function, managing risk better, reducing the time to market, and focusing on the core competence or activities of the firm.
Reasons for outsourcing
Organizations that outsource are seeking to realize benefits or address the following issues:
• Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.
• Focus on Core Business. Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specilaised IT services companies.
• Cost restructuring. Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.
• Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement.
• Knowledge. Access to intellectual property and wider experience and knowledge.
• Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.
• Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house.
• Access to talent. Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.
• Capacity management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.
• Catalyst for change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.
• Enhance capacity for innovation. Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.
• Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier.
• Commodification. The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of businesses access to services previously only available to large corporations.
• Risk management. An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.
• Venture Capital. Some countries match government funds venture capital with private venture capital for startups that start businesses in their country.
• Tax Benefit. Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country.

Criticisms of outsourcing
Quality Risks
Quality Risk is the propensity for a product or service to be defective, due to operations-related issues. Quality risk in outsourcing is driven by a list of factors. One such factor is opportunism by suppliers due to misaligned incentives between buyer and supplier, information asymmetry, high asset specificity, or high supplier switching costs. Other factors contributing to quality risk in outsourcing are poor buyer-supplier communication, lack of supplier capabilities/resources/capacity, or buyer-supplier contract enforceability. Two main concepts must be considered when considering observability as it related to quality risks in outsourcing: the concepts of testability and criticality.
Quality fade is the deliberate and secretive reduction in the quality of labor in order to widen profit margins. The downward changes in human capital are subtle but progressive, and usually unnoticeable by the out sourcer/customer. The initial interview meets requirements, however, with subsequent support, more and more of the support team are replaced with novice or less experienced workers. India IT shops will continue to reduce the quality of human capital, under the pressure of drying up labor supply and upward trend of salary, pushing the quality limits. Such practices are hard to detect, as customers may just simply give up seeking help from the help desk. However, the overall customer satisfaction will be reduced greatly over time. Unless the company constantly conducts customer satisfaction surveys, they may eventually be caught in a surprise of customer churn, and when they find out the root cause, it could be too late. In such cases, it can be hard to dispute the legal contract with the India outsourcing company, as their staff are now trained in the process and the original staff made redundant. In the end, the company that outsources is worse off than before it outsourced its workforce to India.

Public opinion

There is a strong public opinion regarding outsourcing (especially when combined with offshoring) that outsourcing damages a local labor market. Outsourcing is the transfer of the delivery of services which affects both jobs and individuals. It is difficult to dispute that outsourcing has a detrimental effect on individuals who face job disruption and employment insecurity; however, its supporters believe that outsourcing should bring down prices, providing greater economic benefit to all. There are legal protections in the European Union regulations called the Transfer of Undertakings (Protection of Employment). Labor laws in the United States are not as protective as those in the European Union. [20] On June 26 2009, Jeff Immelt, the CEO of General Electric, called for the United States to increase its manufacturing base employment to 20% of the workforce commenting that the U.S. has outsourced too much and can no longer rely on consumer spending to drive demand.

Language skills

In the area of call centers end-user-experience is deemed to be of lower quality when a service is outsourced[citation needed]. This is exacerbated when outsourcing is combined with off-shoring to regions where the first language and culture are different. The questionable quality is particularly evident when call centers that service the public are outsourced and offshored.
The public generally find linguistic features such as accents, word use and phraseology different which may make call center agents difficult to understand. The visual clues that are present in face-to-face encounters are missing from the call center interactions and this also may lead to misunderstandings and difficulties.[22]

Social responsibility

Outsourcing sends jobs to the lower-income areas where work is being outsourced to, which provides jobs in these areas and has a net equalizing effect on the overall distribution of wealth. Some argue that the outsourcing of jobs (particularly off-shore) exploits the lower paid workers. A contrary view is that more people are employed and benefit from paid work. Despite this argument, domestic workers displaced by such equalization are proportionately unable to outsource their own costs of housing, food and transportation.
On the issue of high-skilled labor, such as computer programming, some argue that it is unfair to both the local and off-shore programmers to outsource the work simply because the foreign pay rate is lower. On the other hand, one can argue that paying the higher-rate for local programmers is wasteful, or charity, or simply overpayment. If the end goal of buyers is to pay less for what they buy, and for sellers it is to get a higher price for what they sell, there is nothing automatically unethical about choosing the cheaper of two products, services, or employees.
Social responsibility is also reflected in the costs of benefits provided to workers. Companies outsourcing jobs effectively transfer the cost of retirement and medical benefits to the countries where the services are outsourced. This represents a significant reduction in total cost of labor for the outsourcing company. A side effect of this trend is the reduction in salaries and benefits at home in the occupations most directly impacted by outsourcing.

Quality of service

Quality of service is measured through a service level agreement (SLA) in the outsourcing contract. In poorly defined contracts there is no measure of quality or SLA defined. Even when an SLA exists it may not be to the same level as previously enjoyed. This may be due to the process of implementing proper objective measurement and reporting which is being done for the first time. It may also be lower quality through design to match the lower price.
There are a number of stakeholders who are affected and there is no single view of quality. The CEO may view the lower quality acceptable to meet the business needs at the right price. The retained management team may view quality as slipping compared to what they previously achieved. The end consumer of the service may also receive a change in service that is within agreed SLAs but is still perceived as inadequate. The supplier may view quality in purely meeting the defined SLAs regardless of perception or ability to do better.
Quality in terms of end-user-experience is best measured through customer satisfaction questionnaires which are professionally designed to capture an unbiased view of quality. Surveys can be one of research. This allows quality to be tracked over time and also for corrective action to be identified and taken.
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PostSubject: Continuation   Thu Aug 27, 2009 1:37 pm

Staff turnover

The staff turnover of employee who originally transferred to the outsourcer is a concern for many companies. Turnover is higher under an outsourcer and key company skills may be lost with retention outside of the control of the company.
In outsourcing offshore there is an issue of staff turnover in the outsourcer companies call centers. It is quite normal for such companies to replace its entire workforce each year in a call center. This inhibits the build-up of employee knowledge and keeps quality at a low level.
Company knowledge
Outsourcing could lead to communication problems with transferred employees. For example, before transfer staff have access to broadcast company e-mail informing them of new products, procedures etc. Once in the outsourcing organization the same access may not be available. Also to reduce costs, some outsource employees may not have access to e-mail, but any information which is new is delivered in team meetings.

Qualifications of outsourcers

The outsourcer may replace staff with less qualified people or with people with different non-equivalent qualifications.
In the engineering discipline there has been a debate about the number of engineers being produced by the major economies of the United States, India and China. The argument centers around the definition of an engineering graduate and also disputed numbers. The closest comparable numbers of annual graduates of four-year degrees are United States (137,437) India (112,000) and China (351,537).

Failure to deliver business transformation

Business transformation has traditionally been promised by outsourcing suppliers, but they have usually failed to deliver. In a commoditised market where any half-decent service provider can do things cheaper and faster, smart vendors have promised a second wave of benefits that will improve the client’s business outcomes. According to Vinay Couto of Booz & Company “Clients always use the service provider’s ability to achieve transformation as a key selection criterion. It’s always in the top three and sometimes number one.” Often vendors have promised transformation on the basis of wider domain expertise that they didn’t really have, though Couto also says that this is often down to client’s unwillingness to invest in transformation once an outsourcing contract is in place.

Work, labour, and economy

Offshore outsourcing for the purpose of saving cost can often have a negative influence on the real productivity of a company. Rather than investing in technology to improve productivity, companies gain non-real productivity by hiring fewer people locally and outsourcing work to less productive facilities offshore that appear to be more productive simply because the workers are paid less. Sometimes, this can lead to strange contradictions where workers in a developing country using hand tools can appear to be more productive than a U.S. worker using advanced computer controlled machine tools, simply because their salary appears to be less in terms of U.S. dollars.
In contrast, increases in real productivity are the result of more productive tools or methods of operating that make it possible for a worker to do more work. Non-real productivity gains are the result of shifting work to lower paid workers, often without regards to real productivity. The net result of choosing non-real over real productivity gain is that the company falls behind and obsoletes itself overtime rather than making investments in real productivity.

Standpoint of labor

From the standpoint of labor within countries on the negative end of outsourcing this may represent a new threat, contributing to rampant worker insecurity, and reflective of the general process of globalization (see Krugman, Paul (2006). "Feeling No Pain." New York Times, March 6, 2006). While the "outsourcing" process may provide benefits to less developed countries or global society as a whole, in some form and to some degree - include rising wages or increasing standards of living - these benefits are not secure. Further, the term outsourcing is also used to describe a process by which an internal department, equipment as well as personnel, is sold to a service provider, who may retain the workforce on worse conditions or discharge them in the short term. The affected workers thus often feel they are being "sold down the river."


Security

Before outsourcing an organization is responsible for the actions of all their staff and liable for their actions. When these same people are transferred to an outsourcer they may not change desk but their legal status has changed. They no-longer are directly employed or responsible to the organization. This causes legal, security and compliance issues that need to be addressed through the contract between the client and the suppliers. This is one of the most complex areas of outsourcing and requires a specialist third party adviser.
Fraud is a specific security issue that is criminal activity whether it is by employees or the supplier staff. However, it can be disputed that the fraud is more likely when outsourcers are involved, for example credit card theft when there is scope for fraud by credit card cloning. In April 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when call center workers acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank.
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PostSubject: continuation..   Thu Aug 27, 2009 1:41 pm

Insourcing is the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity that specializes in that operation. Insourcing is a business decision that is often made to maintain control of critical production or competencies. An alternate use of the term implies transferring jobs to within the country where the term is used, either by hiring local subcontractors or building a facility.
Insourcing is widely used in an area such as production to reduce costs of taxes, labor (e.g., American labor is often cheaper than European labor), transportation, etc.
Insourcing at United Parcel Service (UPS) was described in the bestselling book The World Is Flat, by Thomas Friedman.
According to PR Web, insourcing was becoming more common by 2006 as businesses had less than satisfactory experiences with outsourcing (including customer support). Many outsourcing proponents responded to a negative consumer opinion backlash resulting from outsourcing their communications management to vendors who rely on overseas operations.

To those who are concerned that nations may be losing a net amount of jobs due to outsourcing, some point out that insourcing also occurs. According to a study by Mary Amiti and Shang-Jin Wei, in the United States, the United Kingdom, and many other industrialized countries more jobs are insourced than outsourced. They found that out of all the countries in the world they studied, the U.S. and the U.K. actually have the largest net trade surpluses in business services. Countries with a net deficit in business services include Indonesia, Germany and Ireland.

Insourcing is loosely referred in call centers who are doing the work of the outsourcing companies. Companies that outsource include Dell, Hewlett Packard, Symantec, and Linksys. The callcenters and technicians that are contracted to handle the outsourced work are usually over-seas. Customers may refer to these countries as "India" technical support if they are hard to understand over telecommunications. These insourcing companies were a great way to save money for the outsourcing of work, but quality varies, and poor performance has sometimes harmed the reputations of companies who provide 24/7 customer/technical support.

Offshore insourcing offers benefits over outsourcing
By Amit Maheshwari

Recent years have seen a marked increase in offshore operations in lower-cost countries such as India. A growing number of U.S. companies are taking advantage of India's white-collar talent pools, which can cost one-fourth to one-fifth of comparable staff here.
A clear indicator of this trend is that India exported $9.5 billion worth of IT services (mostly to the United States) in 2002-03, a growth of 25 percent over 2001-02. This occurred during the same period in which most U.S. companies registered slow or minimal growth.
Various factors have contributed to the growth in offshore operations. Some include cost-cutting initiatives by American companies, the ability of countries such as India to produce large quantities of skilled resources and the ability for offshore outsourcing companies to demonstrate high-quality processes.
In addition, improvement in international voice and data networks has ushered in a new wave of offshore-based services, focused on a broader array of corporate services. Companies are now using lower-cost countries for technical support, customer service, claims processing and data entry activity.
Traditionally, the way to exploit offshore resources has been through offshore outsourcing providers. Over the years these providers have embraced a two-tier service in which there are U.S.-based consultants who package work for their offshore-based colleagues.
While this model has proved successful for several companies, it has pitfalls. Offshore outsourcing leaves companies with limited control over resources that belong to the outsourcer and creates risks when companies must hand over intellectual property to a third party. In addition, companies looking to exploit offshore outsourcers to gain a competitive advantage may instead harm their value proposition in the marketplace by giving up a core competency. Finally, the cost of offshore outsourcing may be 30 to 40 percent more than required.
An alternative to offshore outsourcing that is gaining popularity is offshore insourcing or "do-it-yourself." An increasing number of U.S. companies are creating their own subsidiary or entity offshore to get the benefits of the offshore model. In this model, the company creates its own global delivery center (GDC) and staffs it with its own offshore employees.

Insourcing has several benefits over the outsourcing approach, such as:
• 30-40 percent additional cost savings over traditional offshore prices
• Greater control over resources because they are direct employees
• Better control over intellectual property
• Higher acceptance of insourcing offshore vs. outsourcing offshore within the company.
Offshore insourcing can work well for companies looking to use offshore resources for long periods of time, working on strategic activities such as product engineering and customer facing services.
Several corporations, including General Electric, American Express, Dell Computers, Texas Instruments, Deloitte and Touche, EDS, IBM, Intel and Oracle have set up their own GDC operations in India.
However, companies attempting to set up their own operations offshore typically face challenges, including:
• Lack of knowledge about which business functions are best to send offshore and how to migrate them
• Lack of expertise and experience setting up the right offshore facilities, infrastructure and team
• Lack of experience with offshore accounting, legal, regulatory, day-to-day operational and human resources issues
• Cultural and communication differences between U.S. employees and offshore employees and vendors
• Capital investment in the facility/infrastructure
• Understanding geopolitical dynamics, their consequences and the proactive remedies.
These and other issues can jeopardize a company's plans to set up a successful GDC within reasonable timeframes and costs.
A four-step risk reduction approach is suggested for companies considering offshore-based insourcing:
1. Assess which business functions are appropriate for offshore outsourcing vs. insourcing.
2. Select a pilot project or process to move or supplement offshore. Find partners who can provide their own facilities to test the program in an incubated manner without making major upfront investments.
3. Retain ownership of operations, employees and delivery. Outsource support services such as accounting, human resources, IT, regulatory filings and vendor management to an offshore vendor.
4. Create and execute change management programs for U.S. and offshore employees including cultural training and cross-country visits.
While third-party offshore outsourcing is a well-accepted model, offshore insourcing is becoming a viable and attractive alternative. However, companies can be exposed to risks that they may not be prepared to manage. Careful planning and partnering can go a long way in reducing the challenges and maximizing returns of offshore operations.
this article, we'll take a brief look at the value, risks and issues of offshore outsourcing for iSeries Java Web development projects. While any project can have challenges, there are some that appear more often with offshore outsourcing projects. We'll look at a new model that can address some of those risks and issues: insourcing.

In-sourcing Benefits

- Reduced Costs
The cost of an In-Source professional could be 75% lower than the total cost for an IT worker in the U.S.
- Increased Professional Resources
- Integrate 3 or 4 In-Source professionals for the total cost of one U.S employee.
- Direct Management
Our clients choose in-sourcing because they prefer hands-on control through the development life cycle of their projects. Instead of relinquishing control to an outsourcing firm who does not understand your business as you do, In-Source allows your knowledge and direction to more effectively impact the development process.
- Turnkey Services
In-Source provides a turnkey solution including facilities, recruitment, human resource management, payroll and benefits administration, tax filings, and communication tools, so you can spend more time focused on your core business.
- Reduced Operational Expenses
We operate a state-of-the-art IT facility in Bangalore, the Silicon Valley of India, at a significantly reduced rate compared to U.S. facilities.
- Extended Productivity Hours
Because of the time difference between the United States and India, your projects could be developed and supported nearly 24/7, including many of the major U.S. holidays, which are not holidays in India. In-Source offers flexible shift times to allow overlap and coordination with your IT professionals.
- Faster Time to Market
Complete projects faster with a larger IT development team.
- Increased Company Profitability
With reduced costs, increased development resources at an affordable price, and faster development periods, In-Source clients can significantly increase profitability.

>>Therefore, i choose insourcing because it lessen costs. With security matters, you can assure that any program is safe and secured with insourcing.


Reference:
http://en.wikipedia.org/wiki/Outsourcing
http://en.wikipedia.org/wiki/Insourcing
http://www.masshightech.com/stories/2003/10/20/focus1-Offshore-insourcing-offers-benefits-over-outsourcing.html
http://www.in-source.com/benefit.html
http://search400.techtarget.com/tip/0,289483,sid3_gci996709,00.html
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Alfredo V. Ala-an

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PostSubject: ASSIGNMENT 8   Fri Aug 28, 2009 5:18 am

As a student, you were invited by the Dean of the Institute of Computing to attend a seminar-workshop on information systems planning with some of the faculty members. In one of the sessions, a discussion of outsourcing came up. You have been asked to present your evaluation about outsourcing the information systems functions of the school.

Required:

You are to take a position- outsource or in-source and justify your position. (3000words)

To think about it is really hard.

Well i'll just justify the what i can give.

To start with.
**************************************************************************************************
Out- Sourcing


to present this .

EXECUTIVE SUMMARY

In the 1990’s, the call center outsourcing industry blossomed into a $10 billion juggernaut with a sustained
yearly growth rate of 25%. From humble beginnings as a high-volume, low-quality dumping ground of lowvalue
customer contacts, the outsource call center has become a critical part of nearly 85% of all Fortune
1000 customer contact solutions. It is estimated that by 2005, the outsource call center industry will reach
$30 billion in revenues in the United States, with nearly 20% of all customer contacts being handled by an
outsourcer.

But what does this mean to you and to your business? Why the recent boom to place your customer
contacts with a different company? How do your customers feel about it? What’s in it for you and what’s in
it for your customer?
This white paper focuses on the decision-making process involved in determining whether it is to your
strategic advantage to outsource all or part of your customer contact center, or to manage your own
business in-house. Key issues that will be discussed are:

• Growth and Trends in the Outsourcing Market. While the overall customer contact industry growth
has reached maturity, the customer contact outsourcing will increasingly be an option selected by
companies. Companies will seek outsourcers who can meet quality requirements and reduce costs.
Near-shore and offshore outsourcing is increasingly becoming an option for companies and will play a
significant role in the future. This section will review the trends in outsourcing and look into the future
of the outsourcing market.

• Determining if Outsourcing is a Viable Alternative for Your Company. Companies within the same
industry may take very different outsourcing strategies. Some may not utilize outsourcing at all, others
may outsource all of their contact center work, others may utilize a mix of internal operations and
outsourcing while still others may change their strategy over time. This section will review the key
factors used by companies in determining their outsource strategy and provides a checklist to help you
determine if outsourcing is right for you.

• Selecting the Right Outsource Group. An outsource relationship should be a partnership.
Partnership requires that there be a strong alignment between the needs of your company and the
capability of the outsource provider. This section reviews the process companies should use in
selecting an outsource partner and how to balance the areas of quality, cost and strategic fit in the
decision making process.

• Leveraging Your Outsource Partnership. It is not enough to engage an outsource partner,
companies must learn to leverage the relationship to their greatest advantage. This section will review
common ways in which a company can leverage their outsource partner’s capabilities.
The approach outlined in this white paper provides proven methods for determining a company’s
operational strategy, outsource vendor selection and relationship management. Destination Excellence
has guided numerous clients though this process achieving a high level of success.


THE GROWTH OF THE OUTSOURCING MARKET

Customer Contact outsourcers have been in business as long as the industry itself. Most of the 1980s
were spent in relative anonymity for the industry as a whole. It was not until the end of the decade that
more than 50% of businesses offered toll-free service to their customers.
The mid-1990s saw rapid growth in the customer contact industry as a whole. This growth was driven by
the increased use of toll-free services by business, with nearly 9 in 10 businesses offering toll-free service
by the end of the decade.
Businesses Offering

Much of the move to increased toll-free services was driven by the economics of contact centers and
customer needs. Coming out of a difficult economic decade in the 1980s, businesses sought to reduce
field services costs by replacing those services with customer contact groups. In addition, customers
demanded the convenience of telephone service and support as they continued to place value on
convenience, speed and time saving activities.
In the midst of the 1990s came the Internet revolution with the introduction of the first user-friendly
interface, Mosaic. While companies attempted to harness the power of the Internet to reduce customer
contact costs, the speed and technology of the Internet could not replicate the ubiquity, speed and
efficiency of toll-free service. Rather than reducing contact volumes, the Internet supported increased
volumes.

The customer contact outsource market gained significant visibility in the early 1990s. Originally a
backwater market, several events converged to increase the visibility of this market.
First, the market had reached a size and scale that began to attract attention. In 1990, the outsource
market reached $1 billion and was growing at a rate of 40% per year in the first half of that decade.
Second, the industry began to consolidate as larger companies saw the opportunity to bring significant
scale and geographical diversity into the market. Third, to fund the consolidation and expansion, manycustomer contact companies went public, allowing some of the first outside view into the economics of the
business.

The early view of the business thrilled the financial analysts. Their enthusiasm was so great, that
outsource contact center companies carried valuations (P:E ratios) in excess of Internet companies.
Exhibiting growth rates of well over 50% (part through market growth, part through acquisition), analysts
thought they had found a diamond in the rough.
The enthusiasm of the analysts was soon brought back to earth when it became clear that the growth of
outsource companies would be limited to market growth in the long run. In addition, the key markets
supported by outsourcers ran into their own issues, quenching the growth of the market for a short period of
time. The P:E ratios of outsource companies are now at normal levels.

• The customer contact market has completed its growth phase and has now reached maturity. The rapid
deployment of customer contact centers by companies has slowed, having reached the saturation point.

• The customer contact market will begin to decline in 2005 due to electronic messaging alternatives (via
the Internet and through other means). The mix of transactions in contact centers will become more
electronic as call volumes flatten and electronic communications increase. Demographics, technology
and an improved wireless infrastructure will make electronic communications more convenient, easier
and faster causing customers to dramatically increase their use of electronic messaging. The lower cost
of handling electronic messages will cause the overall decline in revenues of the contact center market.
PC and Internet

Internet Purchases

• Customer will perform a significant amount of transactions beginning around the turn of the decade, with
almost 50% of transactions done through electronic messaging by 2020. This will be driven by the
speed of access at the home as well as the user-friendly technology on web sites. These advances will
reduce the staffing in real-time customer support.
Gaining a Competitive Advantage Outsourcing v Insourcing
Page 4 Copyright©️ 2003 Destination Excellence, Inc.
877-433-7839 or www.destex.com

• As the outsource market in the U.S. reaches maturity, offshore companies will provide a valid, and less
costly, alternative to North American-based sites. Spanish language calls (representing about 5% of the
market) will generally be placed in Spanish-speaking countries. English language calls will be placed
increasingly offshore into countries where English as a second language is readily available, the quality
of operations is similar to that in the U.S. and the cost is as much as 50% lower than U.S. based
centers.

• Customer contact operations will become more of a commodity in that an outsource group will be able
to replicate the success of internal groups in terms of cost and service. Like payroll processing, contact
operations will be considered for outsourcing to reduce costs or resource requirements within a
company. The penetration of outsourcing will increase to over one-third of the total market around
2010.

The challenge for companies utilizing customer contact groups is to look ahead and develop a strategy
based on their specific requirements. The questions companies must ask are:
1. Is outsourcing a viable option for our company?
2. If I decide to outsource, how do I select the right outsource strategy and partner?
3. How do I continue to leverage the strategic value of my customer contacts with an outsource partner?
Each of these questions is reviewed in the following sections.

Strategic Necessity

Whereas culture is internally driven, strategic necessity is externally driven. Culture may pull in one
direction, but strategic necessity pulls in a different direction. In the 1980s, many companies had a culture
of performing all functions internally and on U.S. soil. Due to increased international competition U.S.
companies were forced to rethink this strategy or face extinction. Very few issues motivate change greater
than the possibility of extinction.

Strategic necessity is a reaction to outside forces. When a company must react strategically, the remaining
issues (quality, annual cost, capital cost, human resource availability and risk) must be reviewed in careful
detail to ensure the proper decision is made. Strategic necessity in the first two decades of the 2000s will
be driven primarily by cost. In the 1990s, companies began to recognize that outsource companies were
competitive on key non-financial measures (e.g., overall customer service) while also matching strategic
capabilities (e.g., partnering with internal groups and providing market intelligence). Consequently, the
strategic necessity of maintaining internal call center operations began to decline.
Strategic necessity will be measured and managed differently by each company. The litmus test used, however, is
the same. The key question is, what strategic value do internal operations provide and at what cost.

Quality

In almost every industry, the quality of the customer contact center is more important than its cost. Quality
here will refer to the quality of the overall customer experience.
Key concepts such as lifetime value of a customer, the cost to attract versus retain a customer and support
of brand image make quality one of the key factors in determining an outsource strategy. The revenue and
margin lost by poor quality can easily outweigh the cost savings of outsourcing.
Annual Cost

The term annual cost is purposely used here. Companies generally have a good handle on what internal
operating costs are for outsource groups. However, the analysis of determining true outsource costs must
not be limited to the operating costs of the contract (e.g., staffing, project management, administration).
These costs must also include incidental costs (e.g., programming, licenses, special requests) that may be
charged by the outsourcer as well as costs borne by the company in managing the contract. These latter
costs include the costs of personnel (e.g., contract manager, QA personnel) and travel.
Capital Cost

Internal customer contact centers often maintain a continuous battle to update technology to implement
new services expected by customers. Often, internal groups receive such investment well after the
customer need is identified and customer complaints have been generated.

Capital allocation to the contact center is difficult because it often competes against core business units.
These business units invest in capital to create new products or services that have a projected return. The
contact center operations, in contrast, often have to implement technology to avoid a decline in customer
contact quality that is difficult to measure.

Outsource companies have the advantage in that they must constantly maintain a competitive infrastructure
for their clients. The cost of the infrastructure is built into pricing eliminating the requirement of client
companies to spend significant capital to utilize this technology. Companies may look to outsourcers as a
way to maintain a competitive technology base without maintaining an expensive infrastructure.

Human Resource Availability

Companies that do not have contact centers as a key part of their business often find it is difficult to locate
and retain qualified contact center professionals, particularly at the middle and executive levels. The
reasons for this are simple. First, the discipline and expertise required for a contact center are not normally
found within the business. This often requires companies to recruit candidates from outside the company.
Second, the career path of contact center professionals may be limited if a path to alternate careers within
the company are not available. This causes turnover within contact center positions.
Some companies may find that the constant battle to maintain strong and knowledgeable leadership within the
contact center distracts them from the core business. They may choose outsourcing as a solution to this issue.

Risk

Risk is an inherent component of outsourcing. A company and its outsourcer may have similar program
goals, but the ultimate ways in which they achieve revenue and profitability are different. Most outsource
companies reduce risk by tying their success to maintaining long-term relationships with clients, causing a
closer alignment of objectives. While this reduces, it does not eliminate risk.
Every company has a risk threshold that they are willing to tolerate. For some companies, regardless of
how small the risk, they will not outsource their contact operations. Other companies are comfortable
establish systems to manage risk, viewing the need to control the output but not the operations themselves.

SELECTING THE RIGHT OUTSOURCE PARTNER

Outsourcing is a partnership. Like any partnership, the objective of the partnership is to add value to both
parties. Partnerships that accomplish this endure over long periods of time. The ramifications of selecting
the wrong partner can be painful.
Fortunately, the process of selecting a positive partnership is well known. Destination Excellence has
assisted a number of companies in selecting partnerships successfully. This process is detailed further in
this section. Adherence to the process outlined here significantly increases the quality and output of the
outsource process.

Develop Your Requirements

First and foremost, a company must detail its expectations. In companies who have performed customer
contact work internally for a long period of time, this process may require significant documentation.
(Internal operations tend to be less documented, as procedures and training are often the intellectual
capital of individuals within the center.) This documentation is critical, however, to properly assess the
capabilities of the companies considered.
Documentation of a program to be outsourced should include:
• An overview of the company and how the program supports overall company goals.
• The mission and vision of the program along with specific and measurable objectives/expectations
(including turn-around times and service levels).
• Volume projections by type (e.g., calls, e-mail, chat), month (weekly if sufficiently cyclical), day (day of
week distribution), and holiday. If media drives some portion of volume, then outline the expected media
schedule.
• Average talk times and after call work times by contact type.
• Hours of operation, including holidays and other events. Include expectations on downtime and disaster
recovery.

• Hiring profiles, initial training requirements, how training will be developed and delivered.
• Non-productive time requirements for training, coaching, monitoring, ongoing training and other activities
desired by the company.

• Estimated staffing levels.
• Schematic of the workflow.
• Schematic of the expected systems set up and system interfaces back to the company.
• Other requirements, as appropriate.

This information will be crucial to the development of an RFP. If information is not available at this time, it
will be required in response to the RFP.

The RFP Process

The RFP process begins with the selection of vendors to include in the distribution of the RFP. This can be
accomplished in one of two ways. First, a company can send an RFI with an overview of the project to a
broad array of vendors and use the responses to the RFI to narrow the field. Alternatively, the company
may survey the industry and pre-select a number of vendors who have a solid reputation of performing well
against similar programs. Only companies with a high probability of success in the program should be
included in the RFP.

The RFP itself should reflect all of the information that a vendor will need to submit a complete and
qualified bid. While there is no single format that is best for every RFP, the following provides an outline
that has worked well in a number of submissions:
• Secrecy Agreement. The signed Secrecy Agreement should be included with the RFP for the vendor.
• Instructions to Bidders. Standard legal language should be included to make clear the time frames,
submission criteria and release the company from any legal obligations in distributing the RFP.
• Bid Selection Criteria. This outlines how the vendor will be selected. The criteria should be clear enough
for vendors to understand what the company considers most important, yet remain flexible to provide the
best overall selection process.
• Timeline. The timeline for submission, review, selection, contract negotiation and implementation should
be outlined in detail.
• Program Overview and Requirements. The requirements developed (see previous sub-section) are
detailed in this section.
• Sample Contract. A standard company contract should be included so that vendors may judge what
contractual criteria may impact their pricing and performance. Vendors should list any objections to the
contract in the Additions, Variances and Exceptions section.
• Bidder Response. A standard response sheet with pricing (using a single pricing format will increase
understanding), performance, support services, systems and other information should be filled out be
each vendor. A clear and consistent bid sheet will allow for objective comparisons between vendors.
Companies may opt to allow an additional response to be provided by the vendor in a freestyle format.
• Additions, Variances and Exceptions. Providing a specific section for deviations from what was
requested allows companies to ensure they are clear on what has been requested will be adhered to.
• References. Require references from similar applications from current and discontinued clients. Also
provide some investigation outside of the references provided to determine what issues companies may
have with the vendor.

After the RFP is developed and the vendors who will receive the RFP selected, each vendor should be
contacted to obtain their level of interest for inclusion. Any vendor who wishes to be included in the RFP
must sign a Secrecy Agreement protecting the information that is being provided to them. Upon receiving a
signed Secrecy Agreement, the vendor will receive a copy of the RFP.
After all the responses have been received, the vendor assessment can begin.

Vendor Assessment

Upon receipt of all vendor RFP responses, the company must determine if some vendors should be
eliminated from consideration. Causes for elimination may include pricing, quality of response, service
capabilities or unacceptable exceptions. Any vendor eliminated should be notified immediately that they
are no longer going to be considered in the process and the reasons why.
Destination Excellence recommends companies evaluate vendors on three specific criteria. These criteria
should receive the appropriate weighting to reflect what is most important to the company. The criteria
include:

Quality. Recommended to be the most highly weighted criteria (normally 50% or more), quality reflects
the ability of a vendor to produce consistently high levels of performance. To judge quality, Destination
Excellence utilizes its 100-Point Audit to evaluate vendors (see Optimizing Customer Care Operations –
The 100 Point Audit for specifics). Vendors receive a score based on a one to two-day audit of their
operation.
• Cost. Vendors’ submissions are also evaluated in terms of cost. Costs include start-up costs, ongoing
costs and termination costs. Costs should be determined over the proposed lifetime of the partnership
agreement. Costs may be factored by year to take into account the greater certainty in costs in the early
years.
• Strategic Fit. For longer-term partnership agreements, an evaluation of vendors is necessary to
determine if the direction and investments vendors plan to make are consistent with the needs of the
company. For example, investments in integrated marketing databases may be important and therefore
should receive consideration. While the strategic fit assessment is rarely the final determinant of the
selected vendor, in cases where the current quality and cost are essentially the same between two
vendors, a strategic fit assessment can help select the best long-term vendor.
With the scores and weights from the above sections, vendors can be rank ordered in their overall score.

LEVERAGING YOUR OUTSOURCE PARTNER

There are many advantages to outsourcing and companies should look to maximize the advantage of their
outsource partnership. It is in the best interest of the company and their outsource partner to fully leverage
this relationship.

This section will review three common ways companies leverage the outsource partnership. These include
access additional operating capacity (operational flexibility), accessing an untapped workforce or access
new technology without the capital cost.

Operational Flexibility

Companies often find challenges in coping with the cyclical nature of their business. In some companies
the peak contact month to low contact month ratio can be as much as two, or higher. Cyclical peaks and
valleys within a year may cause companies to hire new staff only to lay off that same staff later in the year.
This can cause strain excessive strain within the workforce and harm a company’s reputation within the
community. Outsource partners can absorb cyclicality by utilizing people across a variety of programs
throughout the year. This approach provides a stable environment for a company and its work force
throughout the year.

Other companies may have a relatively low peak month to low month ration, but may have challenges
maintaining a trajectory of growth. This is particularly true in newer industries where annual growth rates
can easily exceed 25%. Opening new facilities, project managing technology installations and installing a
new workforce can distracting a company from managing its core business. Such distractions can
ultimately stunt the growth of the business itself. Utilizing outsource groups allows companies to maintain
their focus on the core business without losing market momentum.
Lastly, some companies wish to avoid spending significant capital on new facilities. Capital investment
often receives a higher rate of return in other parts of the business outside of the customer contact
operations. After maximizing utilization of existing facilities, companies turn to outsource groups to provide
additional capacity without capital spending.

Workforce Access

Contact center positions have become the largest entry-level opportunity in the United States. The growth
in employment in the industry has created challenges of locating qualified candidates and turnover of the
existing workforce for companies. In addition, normal local demographic changes have made previously
attractive locations longer attractive for call centers. Companies find themselves in a quandary of
escalating wages in a constricted talent pool with the only viable option of relocating facilities every five
years to follow workforce trends.

Contracting outsource groups allows companies to disconnect themselves with labor location issues,
leaving that issue in the hands of the outsource provider. Due to their size and flexibility, outsource groups
are particularly adept at maintaining flexibility in labor locations to attract a strong workforce in
geographically disperse areas. This allows companies to tap into a constantly changing labor pool without
incurring the expense of moving existing facilities.

The Outsource Partner Perspective

While this section looks primarily at ways to leverage the relationship to the advantage of the client
company, what is the perspective of the outsourcer? Is this truly a partnership that works both ways? In a
word, yes.

Outsource groups’ position in the market is to add the greatest value to any client. The outsource group
must have a complement of facilities, people and technology in order to position themselves competitively.
As with any other business asset, outsourcers gain financial benefits as the utilization of their facilities,
people and technology increases.
Good outsource companies also understand there is great value in selling additional services that a client
can leverage, and negative value in selling a client something that they cannot leverage positively. The
best outsource companies build long-term client relationships by providing access to facilities, people and
technology that add significant value to clients thereby building relationships build on trust.

source: http://www.telerxhealthcare.com/pdf/telerx-wp_outsourcing.pdf


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PostSubject: Insourcing...   Fri Aug 28, 2009 8:34 am


IN-SOURCE or OUTSOURCE?



If given the chance to be invited to attend a seminar-workshop on information systems planning with some of the faculty members. I would really think hard on what right decision should be made regarding this issue. Well it’s quite confusing because there’s no wrong if a company will in source or outsource. Both have their advantages and disadvantages. Let me first define in sourcing and outsourcing and compared them.

What is Outsourcing?

Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering cost or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of land, labor, capital, (information) technology and resources Outsourcing became part of the business lexicon during the 1980s. It is essentially a division of labor. Out sourcing in the information technology field has two meanings One is to commission the development of an application to another organization, usually a company that specializes in the development of this type of application. The other is to hire the services of another company to manage all or parts of the services that otherwise would be rendered by an IT unit of the organization. The latter concept might not include development of new applications.

What is In-sourcing?

The opposite of outsourcing can be defined as in-sourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as in-sourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for in-sourcing because it enables them to maintain a better control of what they outsource. In-sourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. In-sourcing can also mean an organization building a new business center or facility which would specialize in a particular service or product. In-sourcing can also mean an organization building a new business center or facility which would specialize in a particular service or product.


As of now, IT in-sourcing, or bringing previously outsourced IT functions back in-house, is on the rise, according to experts. There is a lot of factors that should be considered in order to decide well. One of those is the global economic recession, IT outsourcing scandals, and the potential cost savings of decreasing the number of outsourced contracts. Companies are even pulling back some outsourced functions because they have found they don’t offer the speed and control that in-sourcing does. Even though there are advantages outsourcing could do, such as less capital expenditure. For example, by outsourcing information technology requirements, a company does not have to buy expensive hardware and software. Less management headache. For example, by outsourcing business process such as accounting, a company no longer has to hire and manage accounting personnel, focus on core competencies. And lastly outsourcing non-core related processes will allow a business to focus more on its core competencies and strengths, giving it a competitive advantage, however, there are some advantages outsourcing has like these Less managerial control, it may be harder to manage the outsourcing service provider as compared to managing your own employees. Outsourcing company goes out of business. If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house. May be more expensive. Sometimes it is cheaper to keep a process in-house as compared to outsourcing. And lastly would be security and confidentiality issues. If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider. But still we can never deny that disadvantages of off shoring have a lot of effects to a company. Especially on the issue about the security. It is the most important thing in an organization, having confidentiality in any of their files and information.

So if they would ask me about my stand, I would rather go with in-sourcing. The reason is to consider the information's confidentiality. Choosing personnel within a company can assure the company's operations and process kept secret because nowadays, it is very hard to find trustworthy personnel. Also, with regard to expertise, we know that there are lots of skilled IT professionals who are working in our University, so why we need to get people outside the institution and not working within the University wherein we already have people who can make or perform that particular job. Another that we should consider about our University is the financial status we are facing right now. We can never be sure if this time, our University could afford on outsourcing software packages for the information systems functions of the school. And it is better to check our resources and allocate solutions that would suit our financial capabilities.

As what have said awhile ago in-sourcing, aside from being cheaper, is more secured than outsourcing. Though outsourcing can provide better competition that makes it a little cheaper, it would not outweigh the advantages given by in-sourcing. It would be easier for our University since they would just hire and manage their own staff. Also through in-sourcing the University could have hands-on control through the development life cycle of their projects. Instead of relinquishing control to an outsourcing firm who does not understand the University’s project as they do, In-Source allows their knowledge and direction to more effectively impact the development process of the information systems functions of the school.

Since outsourcing deals with venturing from outside the company or even outside the Philippines, in-sourcing is much preferable because it eliminates vendor risk and vendor management costs. The University would never mind on dealing with long term contract with other company. It just simple contract between their own staff and would definitely reduced need for ongoing renegotiation. And it is nice to hear that the University would retain full control of the process and the quality of the output. True, in-sourcing assures the University’s information security and integrity and much more ensured. There will be less irregularities and faster data compilation can be done because the person who is gathering it works is within the University, thus he knows how the company functions and what is its exact needs than a person outside the University.

Let us say that the University asked me about the Enrollment System, if it is right to outsource than to in-source. For me the school had a bunch of skilled programmers who can actually do the job better that anyone outside. The reasons would the person who will design and maintain the system is just only within the University so he/she knows better ideas on what to do. He is definitely familiar with the flow like outside contacts could not, he can easily figure out solutions whenever there are problems arising and know the best thing to do. As I always say, the University can lessen the cost if they will hire person inside, this is very important especially in the case of the University right now where they just implemented the budget cost-cutting. Because as they said so, we had a lot of competent IT staff and faculty that could handle the development of the Information System in the University. So why not hire them and let them do the work. The person inside can always do better, they can get ideas outside, and they can develop what they have. Also when the University opt to chose in sourcing, the people they hire would easily observed what the University needs since they are part of the organization. Also, they can suggest new things for the best of the systems that they made. Therefore will have better control over its development and functions.

It is more for the University to make use of their own resources. Like I said, if there is any problem that the Information System would be facing or something went wrong, they could easily communicate and contact their programmers. It is better that way, giving them more time to analyze and solve the problem that outsourcing cannot address easily. Someday, we would be IT professionals soon. And with this, we all know that the main concern of a system would have a better security and integrity. It does not mean if we pay so much attention the security of an Information System means of taking for granted about its quality.

I always mentioned this, but again, the University has a lot of its resources especially when it comes to skilled faculty and staff. As one of the top University in Mindanao, the University offers towering standards of education when it comes to Information System thus giving an idea of why not use these key people for the best.


References:
http://www.wikipedia.org
http://www.ictstandards.com




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PostSubject: cont..   Fri Aug 28, 2009 8:35 am

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Sheila Capacillo

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PostSubject: assignment 8   Fri Aug 28, 2009 11:35 am

Idea Idea Idea

If the Dean of the Institute of Computing will invite me to attend a seminar-workshop these are the things that I will present in my evaluation:

First I will share my insights and knowledge about outsourcing;
Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider.[3] The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include information technology, human resources, facilities, real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, CAD drafting, customer service, market research, manufacturing, designing, web development, print-to-mail, content writing, ghostwriting and engineering. Offshoring is the type of outsourcing in which the buyer organization belongs to another country.
Outsourcing and offshoring are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring. Offshoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same corporation/company.[4][5][6]
With increasing globalization of outsourcing companies, the distinction between outsourcing and offshoring will become less clear over time. This is evident in the increasing presence of Indian outsourcing companies in the United States and United Kingdom. The globalization of outsourcing operating models has resulted in new terms such as nearshoring, noshoring, and rightshoring that reflect the changing mix of locations. This is seen in the opening of offices and operations centers by Indian companies in the U.S. and UK. A major job that is being outsourced is accounting. They are able to complete tax returns across seas for people in America.[7][8]
Multisourcing refers to large outsourcing agreements (predominantly IT).[9] Multisourcing is a framework to enable different parts of the client business to be sourced from different suppliers. This requires a governance model that communicates strategy, clearly defines responsibility and has end-to-end integration.[10]
Strategic outsourcing is the organizing arrangement that emerges when firms rely on intermediate markets to provide specialized capabilities that supplement existing capabilities deployed along a firm’s value chain (see Holcomb & Hitt, 2007). Such an arrangement produces value within firms’ supply chains beyond those benefits achieved through cost economies. Intermediate markets that provide specialized capabilities emerge as different industry conditions intensify the partitioning of production. As a result of greater information standardization and simplified coordination, clear administrative demarcations emerge along a value chain. Partitioning of intermediate markets occurs as the coordination of production across a value chain is simplified and as information becomes standardized, making it easier to transfer activities across boundaries.
After sharing my knowledge about outsourcing, I will discuss why do we need to outsource or the reasons for outsourcing:
Organizations that outsource are seeking to realize benefits or address the following issues:[11][12][13]
• Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.[14]
• Focus on Core Business. Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specilaised IT services companies.
• Cost restructuring. Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.
• Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement.
• Knowledge. Access to intellectual property and wider experience and knowledge.[15]
• Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.[16]
• Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house.
• Access to talent. Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.[4][17]
• Capacity management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.
• Catalyst for change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.
• Enhance capacity for innovation. Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.[18][19]
• Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier.
• Commodification. The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of businesses access to services previously only available to large corporations.
• Risk management. An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.[20]
• Venture Capital. Some countries match government funds venture capital with private venture capital for startups that start businesses in their country.[1]
• Tax Benefit. Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country


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PostSubject: Re: Assignment 8 (Due: August 28, 2009, 13:00hrs)   Fri Aug 28, 2009 12:27 pm

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