1. MGT704 Global Business Management 1.5 Offshoring/BPO Dr Jane
Craig
2. Recall our focus: Creating value in a world of global
competition Introduction to the course
3. Growing and internationalising a business Complex
international diversification Emerging markets / Emerging giants
Introduction to the course in course outline
4. Module 1: Growing and internationalising a business Drivers
of globalisation Internationalising the entrepreneurial firm
Entering foreign markets Offshoring/BPO Module 2: Complex
international diversification Structures for complexity Managing
global competitive dynamics Local firm responses to MNCs Module 3:
Emerging markets / Emerging giants Borrowing and leveraging
resources (I) Borrowing and leveraging resources (II) National
competitive advantage MNCs from developed economies Emerging giants
from fast-growing emerging economies Introduction to the course in
course outline
5. BPO as ambidextrous global strategy India and IT outsourcing
Building capabilities in software services Infosys Agenda
6. Some terminology Captive sourcing (FDI) Onshoring Domestic
in- house Offshoring Locationofactivity Mode of activity In-house
Foreign Domestic Outsourcing Source: Peng, Fig 3.4, p70
7. Definition Gartner identify four segments of BPO: Customer
management (sales, marketing and customer care) Enterprise services
(HR, finance and accounting [F&A], operations and payment
services) Vertical services (vertical-industry-focused processes,
such as mortgage services and credit card services for the banking
sector, claims processing for insurance, and billing services for
telecommunications) Supply management services (logistics,
procurement and warehousing
http://search.proquest.com.ezproxy.usc.edu.au:2048/docview/1076409525/1
3FF9B7209019EB598F/13?accountid=28745
8. Opportunities for both players Outsourcing benefits for
client firms Opportunity to develop capabilities and move up the
value chain for service providers
9. Main reason for offshoring Strong supply of skilled and
qualified professionals at lower labour cost than in the client
companys home country Often India BPO is any outsourcing of
knowledge-intensive processes (often IT)
http://articles.economictimes.indiatimes.com/2012-04-28/news/31453472_1_outsourcing-
industry-bpo-spending-indian-it-bpo
10. Reasons have evolved to include innovation In recent years,
the number of companies that outsource critical business processes
to outside suppliers has grown significantly worldwide. The
business-process outsourcing (BPO) market has been estimated to be
worth $309 billion in 2012, including activities such as finance
and accounting, human resource management, procurement and legal
services, and the overall volume is estimated to be growing at a
rate of around 25% annually. Many organizations initiated BPO as
part of an operational effort (for example, to reduce costs or
access skills), but it has evolved into much more. Lacity, Mary C;
Willcocks, Leslie P (2013) Outsourcing Business Processes for
Innovation MIT Sloan Management Review 54 (3) 63-69.
11. Global sourcing a key trend core component of F500
companies corporate strategy scope expanding beyond traditional IT
or transaction processing using global sourcing as a way to
position for long- term capability building (skills and capacity) a
competitive necessity challenge: integrate process and IT
operations to improve effectiveness and efficiency
12. Outsourcing trend The board of directors of virtually every
big company are now insisting on very articulated outsourcing
strategy Businessweek, 2006 This isnt about labor costthe issue is
that if you dont do it you wont survive MD of Deutsche Bank Global
Business, Jan 2006
13. Offshore addressable market is increasing Leading role of
Global 500 and Fortune 1000 IT spending sets trend for rest of
business world combined IT spend represents 40% of global IT
spending IT budget constitutes 2.3% of $20 trillion combined
revenues
14. Rapid growth in outsourcing business drivers reduce costs
build competencies increase revenue key segment: Indian IT services
Indian IT services exports : Growth Trends Source: NASSCOM