HYPERCOMPETITION,

1
HYPER-COMPETITION, GLOBALIZATION RAPID COMMODITIZA
TION
INVESTMENT CYCLE COMPRESSION, MORE KNOWLEDGE-DRIVE
N OPERATIONS
OUTSIDE SPECIALISTS BROUGHT IN FOR
COMPLEMENTARY ACTIVITIES
OUTSOURCING
INTERNAL FOCUS SHIFTS TOWARDS AREAS OF
UNIQUE COMPETITIVE ADVANTAGE
OUTSOURCING At the Center of a Fundamental
Restructuring of Business
2
OUTSOURCING DELIVERS A
HIERARCHY OF BENIFITS
INNOVATION (3)
CONSERVE CAPITAL (3) IMPROVE QUALITY (3) GROW
REVENUE (4)
ACCESS TO SKILLS (9) VARIABLE COST STRUCTURE
(12) IMPROVE FOCUS (17)
REDUCE COSTS (49)
TOP TEN REASONS FOR OUTSOURCING (PERCENT
RESPONDENTS)
Source The 2004 Outsourcing World Summit
3
BUSINESS PROCESS OUTSOURCING MEANS WORKING ACROSS
THE ORGANIZATION TO DELIVER VALUE TO CUSTOMERS
INFORMATION TECHNOLOGY
MANUFACTURING
FINANCE
CUSTOMER CARE
DEPARTMENTS
4
Value Chain of a Service Company
Acquire Capital Goods Tech
Human- Resource Acquisition Development
Deliver Services To Customer
Acquire Materials supplies
Market Research Analysis
RD Prototype Test
Marketing, Sales, Customer Relationship Management
5
Activity Type Percent
Outsourcing Percent considering outsourcing
Food Cafeteria Services Physical 77 Less
than 10 Facility Engineering
maintenance Physical 75 13 Component
Manufacturing Physical 62 14 Product
warehousing Distribution delivery Physical 62
10 Mailroom Services Physical 62 8 Travel
Services Specialty 75 Less than
10 Legal Specialty 66 12 Advertising Specia
lty 57 22 Payroll Processing Specialty 53 2
6 Document Design layout Specialty 53 6 In
ternet Services Specialty- IT 52 22 Software
development maintenance Specialty
IT 46 27 Data center operations Specialty IT
45 22 Help desk services Specialty IT
42 24 Desktop system Management Specialty
IT 36 22 Telemarketing Transactional 41 21
Customer service Inquiry handling
Transactional 36 18 Customer Order processing
Transactional 32 18 Financial accounting
reporting Transactional 32 11 Employee
benefits Administration Transactional 31 42 P
roduct research High-Touch Development High-sen
sitivity 38 7 Field Service delivery High-touch
High-sensitivity 37 14 H.R Strategy
development High-touch High-sensitivity 35 15 P
roduct prototype test High-touch
High-sensitivity 34 24 Field Sales High-touch
High-sensitivity 27 18
6
INDIA IS THE TOP OFFSHORE DESTINATION TODAY
INDIA
HIGH
PHILIPPINES
ACCEPTANCE
IRELAND
MEDIUM
MIDDLE/SOUTH AMERICA
RUSSIA
CANADA
LOW
MALAYSIA
CHINA
EASTERN EUROPE
ATTRACTIVENESS
LOW MEDIUM HIGH
Source Composite for IT and IT-enabled services,
developed from multiple sources,
including A.T Kearney, The Capco Institute,
ISANI, JDalal Associates
7
FIVE PRINCIPLES FOR CAPTURING THE VALUE OF GLOBAL
OUTSOURCING

• SOURCING AS STRATEGY
• SEEKING COMPETITIVE ADVANTAGE FROM
  INTERNAL SOURCES, EXTERNAL SOURCES AND THE
• COMBINATION OF THE TWO.
• EXPANDING THE VALUE MODEL
• GBPO VALUE ((BUSINESS CASE) X
  (ACCELERATION FLEXIBILITY)) INNOVATION
• ZERO-BASED SOURCING
• SOURCING DECISIONS MADE FROM A BASE OF ZERO
  EVERY PLANNING CYCLE
• MARKET- DRIVEN DECISIONS
• ESTABLISHING BEST SOURCE THROUGH OPEN
  COMPETITION
• OUTSOURCING AS A MANAGEMENT DISCIPLINE