Globalisation & Outsourcing

8/7/2019 Globalisation & Outsourcing

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THE CHANGING INDIAN MARKETTHE CHANGING INDIAN MARKETy Economic liberalization in India along with rapid

technological advances has changed the way business isdone in India.

y These changes present a lot of challenges before themanagers.

y For example: Arun Bharat Ram (M.D. SRS Ltd.) believesthat nearly 25-30% of existing companies might be forced

to stop their operations in our country in the next 2-3 years

y This view can be supported by the fact that many companies such as Hind Cycles ltd., Orkay Silk Mills ltd.etc. which were once leaders in their respective businesses

almost do not exist today.



CHALLENGESCHALLENGES BEFORE INDIANBEFORE INDIANMANAGERSMANAGERS

y INCREASING QUALITY CONSCIOUSNESSyEMPHASIS ON KNOWLEDGE

MANAGEMENTyMERGERS &ACQUISITIONSyCHANGING WORKFORCE PROFILEyGLOBALISATION OF ECONOMY yOUTSOURCING



INCREASING QUALITY

CONSCIOUSNESSy With the increased competion at global level, indian

organisations are becoming more conscious about thequality of their products.

y Quality means creation of increasingly betterproducts/services at competitive cost

y We have adopted the following practices forincreasing quality conciousness:-

1. emphasis on total quality management

2. emphasis on kaizen,

3.six sigma

4. quality certification



EMPHASIS ON KNOWLEDGE

MANAGEMENTy In a simple way, knowledge management is creation,

sharing and use of knowledge organisation-wide

through people, process , and technology.y The three basic elements in knowledge management

is: knowledge creation, knowledge sharing andknowledge utilisation.

yThe challenges are:-1. In many situations, the knowledge creator is not in

a position to describe fully how he created knowledge.



CONTD2. People who create knowledge may be unwillingto share it with others.

3. Managers should be able to create a learningorganisation. A learning organisation is one whichis competent in creating, acquiring and sharingknowledge through mutual trust, respect and

cooperation.



MERGERS & ACQUISTIONS� In merger, one organisation merges another

organisation in its entity while in acquisition,acquires the control of another organisation.

� They create the challenge of proper integrationbetween the acquiring and acquired companies.

� Integration of non-human dimensions is easier,problems come in people integration because of

two reasons:-� 1. People Attrition� 2. Difference in Management Practices



CHANGING WORKFORCE PROFILEy Over the period of time , there has been a tremendous

change in Indian Workforce profile.

y The challenges before managers due to changingprofile of people are:

1. To fulfill the expectations of knowledge workers.

2. Create an environment in which knowledge workers

can work up to their full potential.3. For women employees, creating a balance betweencareer and family life, prevention of sexualharassment, and prejudices against women.



WHAT ISWHAT IS GLOBALISATION ?GLOBALISATION ?

yAn increasing global connectivity and

integration of economy, culture andtechnology.

yA growing economic interdependence of countries worldwide through increasingtrade of products and services, freeinternational capital f low and more rapidand widespread diffusion of technology



THETHE CHALLENGESCHALLENGES THATTHATGLOBALISATION PRESENTSGLOBALISATION PRESENTS

y CULTURAL DIVERSITY

y ECONOMIC DIVERSITY

y LEGAL AND POLITICAL CHANGES

y WORKFORCE DIVERSITY

y

TECHNOLOGICAL ADVANCES



CULTURAL DIVERSITYCULTURAL DIVERSITYy National culture is the values and attitudes shared by

individuals from a specific country that shape theirbehavior and their beliefs about what is important.

y National culture has a greater effect on anorganization's employees than their organization'sculture.

y Getting information about a countrys cultural

differences isnt quite that easy!y For example if you were an American raised in the

United states, how would you characterize U.S culture?



Geert Hofstede identified four dimensions of national

cultures:1. Individualism versus collectivism

2. Power Distance

3. Uncertainty avoidance

4. Quantity versus Quality of life



ECONOMICECONOMIC DIVERSITYDIVERSITY

y A global manager has economic concerns that amanager who operates in a single country doesnt.

y Three of the most obvious economic concerns are :-

y Fluctuating currency

y Exchange rate

y

Inflation ratey Diverse tax policies



LEGALLEGAL AND POLITICAL CHANGESAND POLITICAL CHANGESy Some countries have a history of unstable

governments.

yWith new government comes new rules.y The goal of one government may be to nationalize the

countrys key industries whereas the goal of the nextmay be to encourage free enterprise.

y

For instance, many large businesses have postponeddoing business in China because the Chinesegovernment still has too much control over what theseorganizations do and how they do it.



FOR EXAMPLEy GOOGLES EXIT FROM CHINA:

Cost them millions of dollars

to shift their operation from China in terms of infrastructure which in turn lead to the loss inproductivity

employee workforce loss in terms of recruitment costand cost of training and knowledge transfer.



WORKFORCE DIVERSITYWORKFORCE DIVERSITYy Workforce is the building block of an organization.

y But there is workforce diversity in global companies.

y Workforce diversity implies that various categories of employees bring not only their skills and expertise butalso their attitudes, motivation to work or not to workand the personal characteristics.

y It is a challenge before managers, how to integratethese diverse employees with the organization.



TECHNOLOGICAL ADVANCESTECHNOLOGICAL ADVANCESy Communication and information technology has

facilitated exchanging information and conducting

transactions quickly and cheaply y The flow of information, in turn, accelerates the

diffusion of innovation between countries

y Diffusion occurs at different rate in different countries,

and business leaders need to be concerned about therate of transfer of technologies between countries.



FOR EXAMPLEMICROSOFT has been able to open a new development

centre in Bangaluru(after one in Hyderabad) because

of the seemless transfer of information and technology within the organization.

A similar operation in China may seem a little difficulteven though it is cheaper to operate from China.



ME S ES T VE ME T ESE

LLE ES1. EMPHASIS ON CORE COMPETENCE:- the business is

organized on the basis of core competence, it is likely togenerate competitive advantage.

2. REORGANISATION:- Many companies are restructuringtheir organization structure by thinning theirmanagement levels and expanding span of control. They

have also created need for additional skills on the part of the organizational human resources which can be met by appointing new talents.



CONTDy DEVELOPING HIGH PERFORMING CULTURE:-

organizational culture has an enduring effect on the

behavior of the organizations member. Therefore, theorganization should develop sound organizationalculture which induces its members for highperformance.

COLLINS and PORRAS have provided guidelinesfor developing high performing culture:-

1. encourage experimentation and accept mistakes

2. preserve core ideologies while allowing for change.



OTHER MEASURES AREMANAGER SHOULD HAVE:

1.Ability to convert the facts,statistics and information

into appropriate decision in time.2.Have a deeper understanding of the local market

which includes local laws and customs.

3. To be able to create a congenial working environment

with the right set of work practises which takes intoconsideration the cultural values and attitudes that thevarious individuals carry with them.



OUTSOURCING



Outsourcing is any task, operation, job or process

that could be performed by employees within an

organization, but is instead contracted to a thirdparty for a significant period of time. In addition,

the functions that are performed by the third party

can be performed on-site or off-site.

OUTSOURCING ???



WHY OUTSOURCE?



REASONS OF OUTSOURCING

� Reduction and control of costs

� Avoid large capital investment costs

� Insufficient resources available

Traditionalrole -

reaction toproblem

� Allows company to focus on their core competencies

� Keeping up with cutting-edge technology

� Creating value for the organization and its customers

� Building partnerships

Modernrole ²

business

strategy



Outsourcing is divided into three types:

1) Technology Services Outsourcing

2) Business Process Outsourcing3) Knowledge Process Outsourcing

T YPES OF OUTSOURCING



The fast emerging business world of today requires companies to

use sophisticated and fast computer systems and software.

Therefore it is imperative to choose the right associate for

developing these technologies.Different categories underTSO:

E-Commerce

Software/ Applications development

TECHNOLOGY SERVICES

OUTSOURCING



The new global scenario requires that each company finds its own

niche field that can add value to the world economy.Thus

companies now try to focus their resources on areas that give

maximum yield.Thus the term Business Process Outsourcing

(BPO) came into being«

Categories of services that come under BPO:

Customer Relations

Finance/ Accounting Processes

BUSINESS PROCESS

OUTSOURCING



This involves advanced research, analytical, and technical skills

which means that providers are expected to work independently. It

is also important to note that in BPO, all processes are still laid out

by the client whereas KPO specialists are given managerial control.Among the three types,KPO is the older form of outsourcing and

BPO however is considered as the most popular among the three

types«

K NOW LEDGE PROCESS

OUTSOURCING



Take advantage of the cost-advantages

Get access to specialized services

Concentrate more on your core businessIncreased efficiency

Make faster deliveries to customers

BENEFITS OF OUTSOURCING



1) Loss Of Managerial Control

2) Hidden Costs

3) Threat to Security and

Confidentiality

4) Business environment

5) Dependency on provider

CHALLENGES OF

OUTSOURCING



Be SpecificStay in Touch Where it MattersHave a special Expertise TeamKnow Each Other's CultureRegular reviews

HOW TO OVERCOME T HESE

CHALLENGES

Globalisation & Outsourcing

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