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Outsourcing in IT & The Challenges

Outsourcing in IT & the challenges document discusses outsourcing in the IT industry. It defines outsourcing as obtaining requirements through external parties. Common reasons for outsourcing include lack of internal expertise, cost advantages, and focusing on core strengths. However, challenges include vendor selection, lack of control over vendors, quality issues, and cultural differences. Key factors for successful outsourcing are thorough vendor selection and contracting processes, regular project reviews, and mutual understanding between organizations.

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n.govindarajan
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533 views11 pages

Outsourcing in IT & The Challenges

Outsourcing in IT & the challenges document discusses outsourcing in the IT industry. It defines outsourcing as obtaining requirements through external parties. Common reasons for outsourcing include lack of internal expertise, cost advantages, and focusing on core strengths. However, challenges include vendor selection, lack of control over vendors, quality issues, and cultural differences. Key factors for successful outsourcing are thorough vendor selection and contracting processes, regular project reviews, and mutual understanding between organizations.

Uploaded by

n.govindarajan
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 11

Outsourcing in IT & the challenges

Index Slide
Contents Slide No.

Introduction, Ground rules & Disclaimer 3

What is Outsourcing ? 5

Why do organizations out source? 6

What are the challenges in outsourcing? 7

What are the common mistakes done in outsourcing? 8

What are the factors that drive the outsourcing success ? 9

2
OUTSOURCING

Ground rules

• Mobiles must be completely switched off


• Interaction is encouraged
• questions are welcome after each slide

Disclaimer

• Contents shared in this presentation are from my practical


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

3
OUTSOURCING

NASSCOM predicts

India’s IT and outsourcing industry is expected


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

4
OUTSOURCING

What is Outsourcing?

It is a method to get the requirements done through external


parties or organizations

Examples:

• Maintenance of computer hardware outsourced to a third party

• Outsourcing the job of recruiting young MBA executives

• Outsourcing of development & implementation of systems such as


Inventory Control, Financial accounting etc.

• Outsourcing of credit card application campaign & processing

5
OUTSOURCING

Why do organizations out source?

• Expertise or infrastructure not available within the organization

• Time to market factor

• Helps companies to concentrate on their core strengths

• Cost advantage and increase profitability

• Improved efficiency & better customer satisfaction

• For strategic reasons

6
OUTSOURCING
What are the challenges in outsourcing?

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


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

7
OUTSOURCING
What are the common mistakes done in outsourcing?

• Vendor selection process does not consider all factors

• Contract does not cover all situations and clauses leading to


arguments, challenges & litigation between both the parties

• Lack of clear documentation of Scope of work

• Over caution on either sides lead to loss of TRUST

8
OUTSOURCING
What are the factors that drive the outsourcing success ?

• Meticulous Vendor selection process


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

• Inspection of the process followed by vendor companies


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

• Sharing incentives to vendor companies to encourage quality,


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

9
Questions ?
Thank You

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