book

Web-Based and Traditional Outsourcing

by Vivek Sharma, Varun Sharma, K.S. Rajasekaran

April 2016

Intermediate to advanced

448 pages

14h 5m

English

Auerbach Publications

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Cover
Half Title
Series Page
Title Page
Copyright Page
Dedication Page
Table of Contents
Foreword
Preface
Section I General Outsourcing

1 Outsourcing Rudiments
Brief BackgroundThe Goals of the GameIntegrate, Integrate, and Still IntegrateOutsourcing BasicsInsourcing versus OutsourcingOffshoring versus OutsourcingBusiness Process Outsourcing (BPO)Types of OutsourcingOnshore OutsourcingNearshore OutsourcingOffshore OutsourcingOutsourcing Decision and Its ConsequencesGrowth of Outsourcing Worldwide
2 Outsourcing Benefits
The Strategic CallThe Various ApproachesSubject Matter ExpertiseTechnology's Transformation TouchThe Cost FactorHolistic OfferingsSpeed of the GameThe Engagement PlayersResources OptimizationAround-the-Clock OperationsDemand SpikesHiring Consultants for SetupGeography Is HistoryThe Quality ImperativeReuse of Projects, Resources, Experiences, LearningHigher Control and De-RiskingThe Many, Many BenefitsChallenges
3 To Outsource or Not?
To Be or Not to BeRealities and MythsStrategy and ConsiderationsStrategy—Differs from Market to Market, Industry to IndustryStrategy—Is Outsourcing Part of the Solution or Not?Costs EvaluationPre-Outsourcing EvaluationExample—Outsourcing and BanksExample—BPO Operations—Business and Technology ConvergenceExample—IT Staff in an Accounting Firm—To Outsource or NotOutsourcing—Not a Final Solution in Itself
4 What to Outsource?
Outsourcing ScopeWhat to Outsource?Activities to Outsource?BPO—What to Outsource?Example—Outsourcing by BanksExample—Public Relations (PR) Function OutsourcingExample—End Customer Management through Customer Relationship Management (CRM) SolutionsExample—Corporate Receivables Outsourcing to BanksExample—BPO Outsourcing of Sales Tax ComplianceExample—BPO—Outsourcing Support OperationsExample—Banking Operations OutsourcingExample—Tax Process OutsourcingMiscellaneous Examples
5 Outsourcing to India
Asian EconomyBrief History of Outsourcing in IndiaWhere to Outsource? SWOT Analysis of Outsourcing to IndiaBenefits of Outsourcing to IndiaThe Benefits, at a GlanceIndia—Preferred BPO DestinationTop Outsourcing Cities in IndiaIndian Vendors' Growth ChallengesExample—GEExample—Awards to Indian BPOsPotential Countries for OutsourcingIndia versus Other Outsourcing Destinations
6 Vendor Selection
Vendor ClassificationsVendor Identification, Evaluation, Competency, Selection, and ManagementVendor Competency EvaluationBPO-Specific Vendor CompetencyRole of Technology in Vendor SelectionThe Geographical Bearings of Buyers and Vendors and Some GeneralizationsVendor's Past Performance History CheckVendor Selection Checklist
7 Contracts—Types, Pricing Models, and Issues
Contract Types—Three Major Legal Structures(1) Third-Party Outsourcing(2) Parent-Subsidiary RelationshipCaptive Centers(3) Build-Operate-Transfer (BOT) ModelPricing ModelsFixed-Price ModelTransactional Pricing ModelActivity-Based Pricing ModelCost-Plus Pricing ModelGain-Sharing ModelContract DrawingContractual IssuesContractual RisksCollaborations—Joint VenturesContract TerminationTransitioning—Postcontract TerminationExample—Antidumping U.S. Law
8 Operations—Execution, Challenges, Quality, Etc.
Operations OptimizationOperations Optimization through Vendor ExpertiseOperations ExecutionExample—OperationsExample—BPO Operations—Mentor-Mentee ConceptOperational CostsExample—Chief Financial Officer (CFO)—Role and OperationsExample—Bearings of Office LocationVendor ManagementExample—Outsourcing BPO Operations to IndiaExample—Outsourcing Customer SupportOperational ChallengesExample—Operational Challenges of Banks and Financial OrganizationsRisk ManagementOperations—Contingency—Disaster Recovery (DR)Quality Imperative
Section II Web-Based Outsourcing
9 Web Outsourcing— Introduction
Internet—Brief BackgroundHistory of the InternetHow People Discover Web SitesWeb-Based Outsourcing
10 Web outsourcing Models and Frameworks
Business Model 1—outsourcing over the Web using Well-defined ContractsCompensation PrincipieWorking Framework 1Working Framework 2Salient Feature of This FrameworkRelated ExamplesBusiness Model 2—Outsourcing over the Web without ContractsCompensation PrincipieWorking FrameworkSalient Feature of This ModelMovement of Projects between Models 1 and 2The Models—RolesWeb Portal Owner, AdministratorOutsourcing BuyerProject EvaluatorVendor SellerFinancial IntermediaryCriteria for Success of These ModelsThe Models "1 and 2" Value PropositionBusiness Model 3—Strategic Tie-Ups— The Time Shares—Selling TimeHow It WorksThe Models—RolesWeb Portal Owner, AdministratorProposerInvestorsFinancial IntermediaryThe Web Portal Setup and FeaturesRelated ExamplesCriteria for Success of These ModelsThe Model Value PropositionBusiness Model 4—Strategic Tie-Ups—Making Customers and Employees ShareholdersModel 4a—Making Outsourcing Customers ShareholdersRolesThe Web Portal Setup and FeaturesModel 4b—Making Employees ShareholdersRolesThe Web Portal Setup and FeaturesExamplesCriteria for Success of These ModelsLimitationsThe Models Value PropositionBusiness Model 5—Time-Based Costs for Services and Products in OutsourcingRolesThe Web Portal Setup and FeaturesApplication ExamplesCriteria for Success of These ModelsThe Model Value PropositionBusiness Model 6—For Every "n" Units Sold, Giving "m" Units FreeRolesThe Web Portal Setup and FeaturesApplication ExamplesCriteria for Success of These ModelsThe Model Value PropositionBusiness Model 7—Prepurchase of Outsourced Products and Service in Bulk with Delivery Spread Out in Parts at a Later Period of TimeRolesThe Web Portal Setup and FeaturesApplication ExampleCriteria for Success of These ModelsThe Model Value PropositionBusiness Model 8—Big Projects Outsourcing to a ConsortiumConsortium Contract Basics between PartnersOperationsDesignation of Project ManagersMonitoring and Coordination CommitteeRolesExample 1Example 2Criteria for Success of These ModelsThe Model Value PropositionBusiness Model 9—Using Online Provider/ Vendor to Manage the Internet Business (E-Business) Part/ComponentRolesThe Web Portal Setup and FeaturesCriteria for Success of These ModelsThe Model Value PropositionBusiness Model 10—Automated Outsourcing Using Software AgentsRelated ExamplesThe Model Value Proposition
11 Web Outsourcing Examples
Projects That Are Good Candidates of These ModelsGeneral Category of Applicable ProjectsMiscellaneous ExamplesExample—Design of Application and/or Respective ReviewsExample—Technical Consulting for Problem ResolutionExample —Application DevelopmentExample—Web Site Content WritingExample-Marketing and Consulting OnlineExample—Search Engine Marketing (SEM)Example—Web Link Building ServiceExample—Data CollectionExample—Web Site MarketingExample—NewslettersExample—Online Newspapers and MagazinesExamples—Merging of Fields—Advertisements, Entertainment, Education, and ServiceExample of Outsourcing Online—Tax Preparation ServicesExample—Desktop Publishing (DTP) Outsourcing OnlineExample—Outsourcing Training and E-Learning Products Development OnlineExample-Home and Business ShoppingExample-Outsourcing of Small Web-Based Businesses (e.g., Online Video Rentals)Example—Insourcing Online over the Organization's Internal Intranet NetworkExample—Usage of Online Software AgentsExamples in E-CommerceE-Commerce Applications—Order ManagementExamples of E-Commerce Applications—Content OwnershipExamples of E-Commerce Applications—Interactive Multimedia OnlineExample—Interactive Communications OnlineEDI Example-Medical FieldEDI Example—Usage in Manufacturing and Retail ProcurementEDI Examples—Miscellaneous UsagesEDI Example-International TradeEDIExample—Shift over from Manual to Computerized Online BusinessExample—Financial Organizations and Banks Using Online Service ProvidersExamples—Potential Fields for Outsourcing to IndiaExample—IBM's E-Business StrategyIBM's E-Business ApproachKey Focus AreasExample—Mphasis' VTR (Virtual Tax Room) Tool
12 Web Outsourcing— Criteria for Success, Challenges
"Nature" of Business, OnlineWhat Does Not Qualify for Online OutsourcingMarket ReadinessTarget Geography for Online OutsourcingVast online Information VolumesTransparency and Interoperability between Networked SystemsQualityTime, Speed, and UncertaintyConvenience and Self-ServicePersonalization and CustomizationLearn to outsource, even onlineHigh Demands of Online Users/CustomersOutsourcing Approach Online and ConfidentialityTrainingOnline Vendor/Providers Specialized Domain, Business, and Technology SkillsOnline Outsourcing Organization's Specialized Business SkillsRisk ManagementEmployee RetentionVariable PayAccess to Critical, Sensitive Data by Partners, Online Vendors, and Unauthorized UsersLanguage Nuances OnlineRecession and Low Market economic ConditionsLayoffsReverse Brain DrainReuse of Related Past Work, Knowledge, and ExperiencePresentation Challenges Online for Enabling Quick Decision Making in Web-Based ApplicationsReadability Challenges OnlinePersonalization Challenges through Example—Video Rentals SurveyAcceptance of the ConceptOnline Payment Systems and Electronic Data Interface (EDI) Challenges"Business Transactions Challenges" of E-CommerceTechnical Challenges in E-Commerce ApplicationsThe Rate of Proliferation of Internet/ Intranet Outsourcing PortalsGeneral Challenges Faced by the InternetNeed for StandardsOpennessGlobal GovernanceDesignInvestmentsData ManagementSecurityStrategic CooperationMobilitySpeedLimitations of Online Outsourcing
13 Web outsourcing— Advantages
Business Advantages in the Virtual World of Web OutsourcingPioneer AdvantageHighly Skilled People and ResourcesReuse of Tools, Resources, ExperiencesBorderless World24/7 x 365 operationsSpeedStrategic FocusVendors' Geographical SpreadPersonalized, Customized ServicesExponential Growth ProspectsBudgets for Setup and WorkingWeb—The Information SuperhighwayDematerialization—Migration of Manual/ Paper Records to Electronic Media, onlineLeveraging from Outsourcing, OnlineFinancial BenefitsCross-Currency Conversion BenefitsHigher IntegrationDell's Outsourcing StrategyMass CustomizationDell—Some Salient PointsReduced Learning Curve for Online OrganizationsBrand BuildingSubstantial Changes in the EnvironmentInteroperable CommunicationsQuality and Continuous BenchmarkingLong-Term Career PathsReduced Liability and RiskKnowledge StoreLinguistic Barrier Is Greatly LoweredRepetitive Tasks and Labor Costs—Software AgentsAutomation—Software AgentsOnline PaymentsOperational EfficiencyE-Commerce BenefitsElectronic Data Interchange (EDI) AdvantagesAdvantages of Outsourcing Online to India
14 Business-to-Business Payment Systems Online
E-Commerce—Internet CommunicationsElectronic Payment SystemsPayment GatewaysElectronic Commerce and EDIEDI—Some Definitions"EDI Concept"EDI—The FutureEDI Example-Manual Process Using Paper Checks (Limitations)Clearing Automation through Truncation and Electronic Check Presentment (TECP)Example-Automated Clearing House (ACH) TransfersElectronic Funds Transfer (EFT) ProcessFinancial InstrumentsElectronic TokenE-CashE-Cash BasicsUsage Issues with E-CashE-Cash Working MechanismE-Checks Working MechanismSmart CardSmart Cards—AdvantagesExample—EDI Usage by Sears Roebuck Organization
Section III Slowdown and Outsourcing
15 The Slowdown Scenario
Economic TurmoilIndices Nosedive Worldwide—Growth Forecasts DowngradedForecasts Downgraded in IndiaEconomic Situation in the United Kingdom during SlowdownBudget Squeeze and IT Spending DeclinesExample—Microsoft CEO's ViewExample—Nortel's BankruptcyExample—Satyam Saga—Credibility LossExamples—Frills Cost Cutting in the IT and BPO SectorMoody's Estimates on Outsourcing to IndiaIndia and Other Countries as the Outsourcing Destination
16 Business Repositioning in Slowdown
Business Repositioning—Slowdown—CEOs Speak at Harvard Meeting on Cause and MeasuresBusiness Repositioning—IT Spending and Budget Slash during SlowdownBusiness Opportunities during Economic SlowdownBusiness Repositioning Due to Recession—General StrategiesBusiness Repositioning—High Exposure to Financial Services Sector OutsourcingExample—Business Strategy of InfosysBusiness Deals Contracting—Short- and Long-TermExample—Infosys and Wipro Short- and Long-Term Contracts RatioExample—Airtel-IBM Long-Term ContractBusiness Repositioning through Regional Shifts and StrategyStrategy—Risk Mitigation through Geographical SpreadMergers and Acquisitions (M&A)M&A—Risky AcquisitionsRestructuring and Consolidation in Indian Companies—M&AExample—Axon M&AM&A—Example—Impact on Genpact after Wachovia's Assets Sale to CitigroupM&A ExamplesM&A Example—BarclaysM&A, Hiring Example by CSCMiscellaneous M&A Examples in IndiaGovernments—Support and Control MeasuresGovernment Mitigation Measures WorldwideGovernment Outsourcing ProjectsChallenges Faced by U.S. Administration during SlowdownU.S. Government Bailout and RegulationsExample—Legal Requirements When Outsourcing by American BanksInvestment Wooing by U.S. Government Bodies of Indian FirmsEuropean Government Support during CrisisGovernment of India Support and PoliciesGovernment of India—Taxation Policies during SlowdownSpecial Economic Zones (SEZs) in India during SlowdownExamples of Organizations That Managed the Slowdown SuccessfullyExample—IBM Exception during SlowdownExample—Outsourcing by JP Morgan ChaseExample—M&A—Mergers of Global BanksExample—Omega BPO's Business StrategyExample—Business Processing Outsourcing by Capita, UKExample—Dell Worldwide LaunchExample—Godrej-HP ContractExample—BPO Operations Execution Example—By VertexExample—Legal Process Outsourcing (LPO)Example—TescoExample—Banking ProductsExamples—Miscellaneous
17 Slowdown—Hiring, Layoffs, and Attrition
AttritionLayoffs during SlowdownIndian Reverse Brain DrainEconomy and People's HealthPersonnel RetentionExample—Hiring by RBS of LehmanHiring in India before and during the Financial SlowdownIndia—Back to Hiring after the Economic Recovery
Section IV Outsourcing-Miscellaneous Concerns and The Future
18 Intellectual Property and Data Security
Intellectual Property (IP)PiracyIpSecurityMalicious Codes and Protection MethodsCommon Hacking ExamplesMobile CodeVirus ExamplesSecurity—Risks in E-CommerceNetwork SecuritySecure Messaging over NetworksProtection Mechanisms and Practices against Hacking and Security RisksEncryption and CryptographyDigital Signatures"Firewall"—Infrastructure Protection
19 Reflections about the Future
History RevisitedThe GenerationsPhase 1—1980 to 1990—Tactical Outsourcing— Solve Business-Specific ProblemsPhase II—1991 to 2000—Strategic Outsourcing— Build Strategic RelationshipsPhase 111—2001 Onward—Transformational Outsourcing— Create Interdependencies to Bring InnovationReflections on the Future of OutsourcingPopulation, Labor, and OutsourcingUnionism's Decline in the United StatesThe New Age WorkerThe India and China AxisIndia and ChinaThe Indian EquationChallenges for IndiaMiscellaneous Outsourcing CountriesTrendsIdea versus SizeOutsourcing PromiscuityOutsourcing HighlightsTransformational OutsourcingEnd-to-End SolutionsNeed for SpeedIntermediary DissipationThe Education AlignmentGovernment SupportThe Governing SystemsGlobal IntegrationEnd User SayBusiness MetamorphosisRise of Global PlayersOutsourcing FunctionsEconomy ImpactOutsourcing: Private and Government DealsTemporary Demand SpikesCurrency InterchangeInternet Growth and OutsourcingNew Quality DefinitionsSynergy between Outsourcing PlayersGrowth of New Business AvenuesUseless Data VolumesEducation and CertificationsInventoryAgriculture OutsourcingTourism OutsourcingOil ImpactContingency PlanningJob LossStartup CostWorld SecurityIndividual PrivacyWhat Will Not Be OutsourcedGrowth of Outsourcing in Information Technology and BPO DomainsAutomation, Technology, and OutsourcingThe Technology CurveE-MaterializationWorkplaces MetamorphosisImpact on TransportationExamples of Future Business Forays of OutsourcingMicrocommerce Business OpportunitiesExamplesPerson-to-Person Outsourcing (P2P Offshoring)Knowledge Process Outsourcing (KPO)Outsourcing of R&DLegal Outsourcing (LPO)Energy OutsourcingMiscellaneous Examples of the Near Future of OutsourcingThe Bow and Final Words
Appendix: Enabling Infrastructure and Components
Hardware DeploymentOffice Equipment ProductsThe Client-Server Model and E-CommerceMiddlewareNetworkProxyRoutersTelecom NetworksSatellitesData CompressionData EncryptionEncryption—RSAVideo ConferencingMultimedia—Evolution ChallengesVideo ServerPicturesSome DefinitionsOther Books on the Outsourcing Subject That Include Model II
Bibliography
Index
Author Biographies

Content preview from Web-Based and Traditional Outsourcing

Chapter 3 To Outsource or Not?

Playing the game for some, playing to win for some, and the majority who fail to play.

To Be or Not to Be

Organizations looking to outsource their business should deliberate, holistically break down, and prioritize into multiple categories the organization’s activities and functions. The following list may thereafter be used to consider which functions/ activities qualify or not for outsourcing (see Figure 3.1).

Such functions that should always remain with the firm and never be outsourced.
Such functions that are fit for immediate outsourcing. Though they may be vital for the firm, the firm does not has (nor wishes to have) expertise to operate these functions.
Peripheral activities in which the firm does ...

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Outsourcing Dilemma: The Search for Competitiveness, The

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Web-Based and Traditional Outsourcing

by Vivek Sharma, Varun Sharma, K.S. Rajasekaran

Chapter 3 To Outsource or Not?

To Be or Not to Be

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