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Outsourcing Report. Objectives are: To conduct a literature review on various trends in outsourcing during the past ten years. To analyse and understand the winners and losers in outsourcing. To explore more into the

Extracts from this document...

Introduction

CHAPTER -1 1.1. Executive Summary Outsourcing is now one of the most common practices that both private and public sectors organizations do and has now formed a successful business strategy everywhere. Now, most of the firms outsource at least a few of the functions which they used to perform by themselves. Firms can achieve different advantages by successfully outsourcing their work, even though there are many risk involved if outsourcing is not fruitful. However, the decision to outsource is one of the major strategic decisions making for most of the companies. It involves evaluating the reduction in costs and comparing the consequences of loss in control over the performance of some business processes. The opportunity to offshore and outsource should never be taken casually, as they are affected by many social economic, cultural and political factors. Taylor (2007) comments that the market for outsourcing has experienced the strongest growth over the last few years owing to the increased focus on core competencies, web development initiatives, heightened usage of ERP, collaboration across different industries and a constricted work force pool. While, the outsourcing of non-core and transaction based business processes has especially gained vital impetus during the last couple of years for both large and small scale enterprises. They have now become more comfortable with the concept of outsourcing and its inherent advantages. The outsourcing market has got an enormous potential in future. According to Green and Henderson (2010) Outsourcing can be defined in the simplest way as "the transfer of operational responsibility of either business processes or infrastructure management to an external service provider." The outsourced function or process is considered to be non-core in nature by customers, but the process can vary from high volume, repetitive functions like the electronic transaction processing system to even more customized services like technology help desk outsourcing. Even though outsourcing is not a new concept or terminology, it has got increasing recognition among corporations as an alternative to in house functions, as well as supplementing IT services and it has initiated significant growth for them over the last few years. ...read more.

Middle

This makes technology surrounding electronic transaction to be more complex, expensive and time consuming to maintain. As a result more companies are now going for transaction based outsourcing model. The financial services industry has now accepted it due to its better consolidation within the industry. Eliott and Torkko (1996) suggests that credit and debit card outsourcing services is a major contributor to growth in outsourcing services in the last couple of years. Security is one of the significant aspects of electronic transaction processing. Despite there are large number of opportunities to shop online, security concerns deter consumers from considering electronic payment methods due to fraudulent activities over the cyber space. Recent incidents of hacking have unnerved many online shoppers. IT software and service providers have now become more proficient in providing security solutions. Checkfree Corporation is leading provider of B2C electronic transaction processing. The company serves around five million customers and 144 merchants that include nine of the top ten banks. One of the most compelling reasons to choose Checkfree's services is that it guarantees to pay anyone, anywhere. They also promise delivery of payments to smaller organizations and individuals. 3.5. Human Resources According to Fontagne (2009) the human resources functions include "all transactions and process based activities that are related to the design of an organization as well as procurement and support of human capital within the organization." Responsibilities that commonly fall under human resources include policy development, organizational design, corporate communications, payroll, recruiting, training and development and employee record maintenance. Laabs (1993) suggests that majority of the firms have now started to outsource transaction based processes like payroll and benefits administration. This activity of outsourcing process based activities like human resource administration has increased as those processes have now become more complex and unmanageable. The frequently changing regulatory and legal employment requirements, tax reporting systems are examples of recent changes in human resource space which has led to the outsourcing trend in this area. ...read more.

Conclusion

This can help a lot in saving resource, time and money. * Always limit information to what is being requested: Manufacturing firms should always take care that providing more information than what is requested is unnecessary. More information needs more time for review and may not improve the quality. * Timely and regularly communication with Project Managers: All the outsourcing companies needs to keep track on how the vendors are working on their project regularly. This helps in finishing the work in time without much errors and problems. Regular feedbacks and review sessions can create vigour in the mind of the vendor and help in producing quality product within a short span of time. * Learn from the failure and success of others: All the outsourcing firms' needs to be proactive and remain in constant touch with the market. This can help out a lot in finding out the providers who are not performing well and outsource the tasks to other successful vendors. Moreover, analysing the outsourcing strategies adopted by other firms can also be helpful in formulating the plans and policies. * Meet the Provider: It is extremely very important to meet the provider physically before entering into a contract. Meetings that are well run and carefully planned can help in understanding the requirements of both the parties. However, teleconferencing is an option when face to face meetings are not possible. Meetings help a lot in understanding each party's needs and standards. In all possible cases it is very vital to conduct a face to face meeting. * Written Contracts: There should always be written contracts between the outsourcing and the outsourced company. This document should cover the following: a) locations where the product is developed/ manufactured. b) Specific product or services that are shipped to the contract facility. c) Responsibilities and duties of each participant. d) The condition and manner of shipping. e) Product segregation. f) Commitment to inform holders of licence regarding deviations and errors. g) When and how the contract facility is properly audited. ...read more.

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