strategic outsourcing project.docx

Chapter - 1INTRODUCTIONOUTSOURCING:- Historical BackgroundOutsourcing dates back to the 1970s. Initially it only involved IT-related issues, but gradually more and more enterprises realized that they could not be experts in more than one or two fields. This Conclusion made them get rid of various areas of activity and entrust them to specialists. According to a survey by Fortune magazine, over 90% of business organizations today take advantage of externalService providers, and in the European market alone the 2001 estimate of such services was US$27 billion, which is growing from year to year. Originally, outsourcing was only used by large Corporations, but nowadays it is becoming more and more popular among small-sized enterprises.The broader use of outsourcing in the industrial market results from the build-up of competitive Pressures and progressing globalization as the environment becomes increasingly complex, faster And faster advancement of technology, with the consequent changes in the conditions in which any Given enterprise functions, necessitate the search for more and newer methods which keep one ahead of ones competitors. In the past the key to success was bulk; today the importance of high quality is growing. In the past the key to success was the bulk, today the importance of high quality is growing.As the managerial paradigm shifts from .bigger is better. to lean and mean. and from .high-volume. To .high-value, Companies are being forced to identify exactly where they have the greatest competitive advantage, and to redefine their organizational structures to maximize that advantage. An increasingly common way for organizations to try and increase their .flexibility. And generate .high valueis through outsourcing . This situation requires precise identification of the line ofBusiness one wishes to follow (ensuring a competitive advantage) and a careful analysis of its weak and strong points one important result of this process is a recognition and reassessment of those activities which are not core. In particular, whether these non-core activities should be carried out by the organization itself (make) or outsourced to a specialist third party (buy) Each enterprise that wants to outsource some of its activities must determine:1. What tasks should be accomplished in-house;2. What tasks should be accomplished through strategic partnerships; and3. What tasks should be contracted out (outsourced) to third-party specialists.The decision to commission some processes to an external provider is strategic in nature, and it can largely determine a firms future; it must therefore be well-thought-out and informed.Outsourcing sometimes involves transferring employees and assets from one firm to another, but not always.Outsourcing is also used to describe the practice of handing over control of public servicestofor-profitcorporations.Outsourcing includes both foreign and domestic contracting,and sometimes includes off shoringor relocating a business function to another country.Financial savings from lower international labor rates is a big motivation for outsourcing /off shoring.The opposite of outsourcing is calledin- sourcing, which entails bringing processes handled by third-party firms in-house, and is sometimes accomplished viavertical integration. However, a business can provide a contract service to another business without necessarily in-sourcing that business process.Outsourcing occurs when a company purchases products or services from an outside supplier, rather than performing the same work within its own facilities, in order to cut costs. The decision to outsource is a major strategic one for most companies, since it involves weighing the potential cost savings against the consequences of a loss in control over the product or service. Some common examples of outsourcing include manufacturing of components, computer programming services, tax compliance and other accounting functions, training administration, customer service, transportation of products, benefits and compensation planning, payroll, and other human resource functions. A relatively new trend in outsourcing is employee leasing, in which specialized vendors recruit, hire, train, and pay their clients' employees, as well as arrange health care coverage and other benefits.The growth in outsourcing in recent years is partly the result of a general shift in business philosophy. Prior to the mid-1980s, many companies sought to acquire other companies and diversify their business interests in order to reduce risk. As more companies discovered that there were limited advantages to running a large group of unrelated businesses, however, many began to divest subsidiaries and refocus their efforts on one or a few closely related areas of business. Companies tried to identify or develop a "core competence," a unique combination of experience and expertise that would provide a source of competitive advantage in a given industry. All aspects of the company's operations were aligned around the core competence, and any activities or functions that were not considered necessary to preserve it were then outsourced. Today, outsourcing is embraced by companies of all sizes and industry orientations. As analysts Tom Osmond commented inEmployee Benefit News,"Many companies have decided that transactional and administrative functions are neither core competencies nor value-added activities. In fact, some companies are putting themselves at risk as a result of using outdated technology and not complying with government regulations. Vendors, by focusing on administration as part of their business model, provide better service enforced by contracts and service-level agreements."Successful outsourcing requires a strong understanding of the organization's capabilities and future direction. As William R. King explained inInformation Systems Management,"decisions regarding outsourcing significant functions are among the most strategic that can be made by an organization, because they address the basic organizational choice of the functions for which internal expertise is developed and nurtured and those for which such expertise is purchased. These are basic decisions regarding organizational design." Outsourcing based only upon a comparison of costs can lead companies to miss opportunities to gain knowledge that might lead to the development of new products or technologies.Outsourcing can be undertaken to varying degrees, ranging from total outsourcing to selective outsourcing. Total outsourcing may involve dismantling entire departments or divisions and transferring the employees, facilities, equipment, and complete responsibility for a product or function to an outside vendor. In contrast, selective outsourcing may target a single, time-consuming task within a department, such as preparing the payroll or manufacturing a minor component that can be handled more efficiently by an outside specialist.Vendors providing outsourcing services are generally grouped into two models: Business Process Outsourcing (BPO) and Application Service Provider (ASP). In the BPO model, major resources and assets are transferred from the company to the vendor. Under the ASP model, on the other hand, vendors concentrate on providing selected services for multiple clients. But as Osmond toldEmployee Benefit News,many variations exist within these two models. "Each vendor has a particular focus and/or point of entry to the market, particularly in the ASP space," Osmond stated. "There is also a wide range of pricing models and option. The good news is that there is a seemingly endless combination of service, pricing, and delivery, providing a solution for most situations. The bad news is that it can be difficult to compare vendors on an apples-to-apples basis."ADVANTAGES OF OUTSOURCINGCompanies that decide to outsource do so for a number of reasons, all of which are based on realizing gains in business profitability and efficiency. Principal merits of outsourcing include the following: Cost savings: - Many businesses embrace outsourcing as a way to realize cost savings or better cost control over the outsourced function. Companies usually outsource to a vendor that specializes in a given function and performs that function more efficiently than the company could, simply by virtue of transaction volume. Staffing level:-.Another common reason for outsourcing is to achieve headcount reductions or minimize the fluctuations in staffing that may occur due to changes in demand for a product or service. Companies also outsource in order to reduce the workload on their employees (freeing them to take on additional moneymaking projects for the business), or to provide more development opportunities for their employees by freeing them from tedious tasks. Focus:-Some companies outsource in order to eliminate distractions and force themselves to concentrate on their core competencies. This can be a particularly attractive benefit for start-up firms. Outsourcing can free the entrepreneur from tedious and time-consuming tasks, such as payroll, so that he or she can concentrate on the marketing and sales activities that are most essential to the firm's long-term growth and prosperity. "What an outsourcing partner really sells is focus," wrote Adam Katz-Stone inBaltimore Business Journal."In accounting for instance, that is something that typically is seen as necessary but not essential, not the core of the business. So you bring in an outsourcing partner and then you don't have to think about that any more. You can focus your energies on sales, marketing, and all the other things that matter more." Morale: -This is an often-overlooked but still notable benefit that can sometimes be gained by initiating an outsourcing relationship. "Often a business's lack of internal expertise or dedication to non-core tasks results in poor attitudes and ultimately poor performance," wrote Kevin Grauman inCPA Journal."This can lead to overlap and duplication of internal efforts. An effectively designed and ongoing communication process emanating from one or more outsourcers can greatly reduce or eliminate these duplications." Flexibility:-Still others outsource to achieve greater financial flexibility, since the sale of assets that formerly supported an outsourced function can improve a company's cash flow. A possible pitfall in this reasoning is that many vendors demand long-term contracts, which may reduce flexibility. Knowledge:-Some experts tout outsourcing of computer programming and other information technology functions as a way to gain access to new technology and outside expertise. This may be of particular benefit to small businesses, which may not be able to afford to hire computer experts or develop the in-house expertise to maintain high-level technology. When such tasks are outsourced, the small business gains access to new technology that can help it compete with larger companies. Accountability:-Outsourcing is predicated on the understandingshared by business and vendor alikethat such arrangements require quality service in exchange for payment. "Paying for a business service creates the expectation of performance," stated Grauman. "Outsourcers are well aware that this accountability is both practical and legal, with fiscal implications. The same cannot be said for internally provided functions."DISADVANTAGES OF OUTSOURCINGSome of the majorpotentialdisadvantages to outsourcing include poor quality control, decreased company loyalty, a lengthy bid process, and a loss of strategic alignment. All of these concerns can be addressed and minimized, however, by companies who go about the outsourcing process in an informed and deliberate fashion.Info Worlds Maggie Biggs counsels businesses to define "exactly what business processes and/or functions it makes sense to maintain via a service relationship. Unless you have a lot of resources to expend, it may make sense to prioritize outsourcing projects based on the number of benefits you expect to gain from the arrangement." There may also be inherent advantages of maintaining certain functions internally. For example, company employees may have a better understanding of the industry, and their vested interests may mean they are more likely to make decisions in accordance with the company's goals. Indeed, most analysts discourage companies from outsourcing core functions that directly affect the products or services that the business offers.OTHERS DISADVANTAGES Dependence on the supplier Hidden costs Loss of know-how - losing touch with new technological breakthroughs that offer opportunities for product and process innovations Loss of long-run research and development (R&D) competitiveness The risk of co-operating with a dishonest supplier which, having gained access to knowledge Concerning a firm and its products, may use it against that firm in the future Service providers lack of necessary capabilities Communication and coordination difficulties.

Strategic outsourcingStrategic outsourcing is the process of engaging the services of a provider to manage essential tasks that would otherwise be managed by in-house personnel. This is often done to allow a business to arrange the use of its assets to best advantage, and allow the company to move closer to the achievement of its goals. An outsourcing strategy of this type may be employed by businesses and other organizations of any size, and normally helps to reduce the cost of operations as well as allow available resources to be allocated to the other necessary functions that are still managed within the organization proper.Many people tend to associate outsourcing with small companies that operate with limited budgets. This is often true, since a smaller business enterprise is likely to have limited resources. When this is the case, a strategic outsourcing effort may involve contracting with a provider to manage the process of generating invoices to customers, receiving those payments, and paying any outstanding debts using the proceeds from those payments. Thus, the outsourcing allows the small company to divert resources that would normally go to supporting an accounting department into other important areas, such as product development, marketing, or sales.Larger businesses can also make use of strategic outsourcing as a means of utilizing their resources to better advantage. For example, a business may choose not to maintain an in-house sales force, but contract out the sales effort to others who generate sales on behalf of the company. With this model, the business does not have to be concerned with the expense of salaries and benefit packages for salespeople. Instead, the business only has to provide the agreed-upon commissions for sales generated by the business partner, and any monthly fee charged as part of the contractual agreement between the two entities.The core idea behind strategic outsourcing is to benefit in some manner from allowing outside entities to take over the operation and management of a given function. Those benefits can take many different forms. Often, the idea is to increase the bottom line of a company by reducing various operating expenses. At other times, the benefit has to do with having immediate access to professionals who specialize in handling the outsourced function, without the need to train personnel to take over those functions. The benefit may be a matter of convenience, allowing the business owner to not have to deal with necessary functions that he or she does not wish to deal with, or feels unable to manage with any degree of efficiency. As long as the benefits that are generated by the arrangement is considered sufficient by the client, then the process of strategic outsourcing can be considered a success.How to Develop an Outsourcing StrategyMethod 1 of 4: Examine the Needs of Your Organization

1 Define organizational objectives: -Your goal may be to help a start-up get off the ground. Alternatively, your organization may be well-established and focused on innovating and developing new products.2 Pinpoint your reasons for outsourcing: -Accessing tools and skills that are not available in-house, reducing operational costs and accelerating organizational change are a few examples.3 Outline a plan for achieving organizational goals: - Your Company may be in the process of offering a new service to existing clients or expanding the range of services to attract new clients. Your detailed plan might include hiring outside consultants, buying parts from a third-party vendor or training in-house personnel to deliver services.Method 2of 4: Research outside resources

Contact outside vendors and service providers to inquire about their expert is:-One of the most important reasons to outsource a particular service is to benefit from the knowledge and experience of outside individuals and/or firms.Ask for cost estimates. Gathering cost estimates early on in the process will aid you in conducting a cost-benefit analysis and competitive pricing studies. Check references to ensure quality of services. Ask to speak to other organizations that have been served by the vendor or service provider.Method 3 of 4: Assess the Costs and Risks of Outsourcing1 Calculate the financial costs and savings:-Training in-house staff and funding office space and equipment for new staff may result in higher costs than outsourcing tasks to a third-party.Consider contract maintenance costs. In-house personnel must oversee outsourcing contracts, which might involve an investment of time, equipment and travel expenses. Determine if necessary skills exist in-house. Salaried employees might possess required skills, making it unnecessary to hire outside vendors or consultants. 2 Evaluate quality needs: -Outsourcing can be risky if an outside vendor, contractor or consultancy firm does not meet quality expectations. In these cases, organizations typically incur greater costs because they must have the work revised by another vendor or hire in-person staff to correct issues. Establish quality standards by talking to clients and holding internal meetings to develop a list of must-have qualities.Distribute quality requirements. Make sure that your outside vendors and consultants receive a clear explanation of quality standards, both verbally and in writing.

3Analyze cultural and communication dynamics: -The nature of the work might dictate that you outsource to domestic firms that understand the culture of your clients. Alternatively, your needs may be technical in nature, making it more affordable to outsource offshore.4 Evaluate legal considerations: -Examine tax laws, contract language, data protection responsibilities and other factors relevant to your industry and workplace before signing an outsourcing agreement.5 Examine relationship risks: - Consider internal relationships. Outsourcing a significant portion of the responsibilities of in-house staff should be accompanied by an explanation. Always communicate openly with personnel to avoid misunderstandings and low employee morale.Examine relationships with clients. Determine how your clients will be affected by your outsourcing plans. For example, a client who is accustomed to receiving blog posts written by your in-house staff might not want the content to come from another vendor or a different part of the world.Discuss outsourcing plans with existing clients. Keep clients informed about upcoming outsourcing plans before implementation.

Method 4 of 4 1 Hire in-house personnel who have necessary expertise:-While you might outsource large quantities of work, having someone in-house who understands how to oversee the outsourced tasks is essential for ensuring that your organization's needs are met and services are delivered as promised.2 Avoid becoming locked into a contract with a single vendor:-Include language in your contract that allows you to exit the business relationship after a trial period. This allows you to properly evaluate service quality, reliability and communication practices.

NEXUS MARKETINGNEXUS MARKETINGis a Jalandhar (India) based high caliberStrategic Marketing,Strategic Management&Business Consultancyorganization run by highly qualified & experienced professionals. NEXUS MARKETING is a well-established marketing consultant and is a management consultant offering services that embrace: Strategic Marketing Program me, Formulation of Marketing Strategies, Market Entry Strategies and Business Strategies Conducting Market Assessment and Diagnostic Studies & Marketing Research Distribution related studies, channel evaluation and channel development strategies Identification and evaluation of strategic business alliances (Marketing, distribution, JV and purchasing/sourcing/contract manufacturing) BusinessRestructuringandOperations Optimizationstudies Strategic Business Planning Organizational Restructuring and Human Resource Management Strategy Work Force Orientation & TrainingWe provide solutions that change the way people work and organizations do business. In virtually every industry, from manufacturing to financial services, Information Technology to education, health care to trading, NEXUS has been helping companies leverage their resources by reducing their operating costs and increasing their productivity. .We possess the domain expertise to understand the critical issues facing your business and we offer proven modules & comprehensive services that streamline process and reduce complexity of operations. More importantly they are tailored to reduce costs & take your business to a new level of competitive advantage.Journey started with a small step in the direction of excellence has resulted in development of a transactional consultancy organization providing ONE STOP MARKETING SOLUTIONS. The foundation upon which our team is created is based upon the premise that motivated people and long-standing relationships are the ultimate tools of success; and creativity, energy, perseverance and loyalty are just as important as a platinum resume. Measurable ResultsWe believe our consulting responsibility goes beyond assessment and recommendation. Our consultants will assure that your objectives are translated into measurable performance improvement and bottom-line resultsWhen you need a CHAMPION to bring in EXCELLENCE, we have a TEAM to do it. NEXUS MARKETING specializes in conducting market studies and market research pertaining to consumer/durable products, industrial products, social issues, hospitality and non-conventional business services. The company has successfully carried out several assignments of this nature for Indian and foreign clients. List shown below shows the diversity of the projects undertaken by us.

Figure 1 Industrial safety expenditures before and after introducing outsourcingStrategy.

Industrial safety Expenditures before Implementing outsourcing Industrial safety Expenditures after Implementing outsourcing

OBJECTIVESAlong with this we are trying to assess companys performance compared with that of the competition To know the area in which the dealer satisfy their customer and the areas that they do not satisfy. To come out with the conclusion and recommendation based on the analysis and interpretation. achieving a gain in competitive advantage, spending more time on those activities that are truly central to the success of the organization, repositioning the organization in the marketplace, or achieving a dramatic increase in share price

Chapter - 2

LITERATURE REVIEWDwindling resources and market competitiveness have forced organizations to scrutinize their methods of producing goods and services and make changes in their processes in order to maximize economic returns. To be able to survive and be profitable in current globalization era, organizations have pursued continuous improvement, leaned up production, reengineered business processes, and Integrated supply chains ( Brannemo 2006). Over the past decades there is a growing realization of the important contribution of sourcing strategy on organizational performance (Cousins et al., 2006). Outsourcing is a management strategy by which an organization delegates major, non-core functions to specialized and efficient service providers. According to Corbett (1999) outsourcing is nothing less than the holistic restructuring of corporations around core competencies and outside relationships. Yankelovih (2003) indicated that two-third of companies world-wide outsource at least one business process to an external third party. This practice appears to be most common in the U.S., Canada, and Australia, where 72 percent of outsourcing is being sought. Javaligi (1998) noted that successful implementation of an outsourcing strategy has been credited with helping to cut cost increase capacity, improve capacity and improve quality.Kotabe (1998) argued that there could be negative long-term consequences of outsourcing resulting from a companys dependence on independent suppliers. Such reliance on outsourcing may make it inherently difficult for the company to sustain its long-term competitive advantage without engaging in the developmental activities of the constantly evolving design and engineering technologies. ThisView point was corroborated by Corley (2000) when he examined the outcomes of technology sourcing partnerships from the sourcing firms point of view and found out that, equity-based alliances were more effective than contract-based outsourcing. Steensma, Kevin and Corley (2000) suggest that the outcomes from technology partnerships for sourcing firms depend on the interaction between technology attributes and the interdependence between source and sourcing firms. Klaasetal (2001), suggest that the influence of organizational characteristics is highly contingent, suggesting that organizational characteristics have different effects on various types of outsourcing activities outsourced. As such, it appears that many factors such as pay level, promotional opportunities and demand uncertainty should be considered when deciding to outsource functions or Activities. Kotabe (1998) identifies three types of performance measures as necessary components in any outsourcing performance measurement system: strategic measures; financial measures; and quality measures. Malhorta (1997) used additional dimensions of market performance such as costs savings, cycle time, customer satisfaction, and productivity to measure the effectiveness of outsourcing strategy. Foster (1999) argue from a different perspective, obstacles such as poor choices of sourcing partners, inadequate planning and training/skills needed to manage outsourcing activities and poor organizational communication have also been identified as key determinant of the success of outsourcing projects . Lau and Hurley (1997) examined the relationship between outsourcing and profitability margin and they found that Chryslers profit margin is four times as high as that of GM due to effective outsourcing strategy. Frayer, Scannell, and Thomas (2000) suggest that companies are increasingly viewing outsourcing strategies as a means of reducing costs, increasing quality, and enhancing a firms overall competitive position.According to Ellram et al. (2007), outsourcing has implications for day-to-day management and performance, as well as strategic implications. Therefore, companies must outsource intelligently. Outsourcing decisions may affect companys cost structures, long-term competitive situation and can also alter the nature of risks that the company must manage (Brannemo, 2006). Hence, it is crucial for management to understand and have a clear conceptual framework of their outsourcing decision. Furthermore, it will also important that company must know the benefits and risks of outsourcing. The increasing use of outsourcing arrangements, as well as the unfamiliar complexity associated with it especially in developing countries suggests the need to probe further about how to effectively utilize this strategy.

Chapter - 3REASEARCH METHODOGYTheprocessused to collectinformationanddatafor the purpose ofmakingbusinessdecisions. The methodology may include publicationresearch, interviews, surveysand other researchtechniques, and could include both present and historical information.Methodologyis the systematic, theoretical analysis of the methods applied to a field of study. It comprises the theoretical analysis of the body of methods and principles associated with a branch of knowledge. Typically, it encompasses concepts such as paradigm, theoretical model, phases and quantitative or qualitative techniques.A methodology does not set out to provide solutions - it is, therefore, not the same thing as a method. Instead, it offers the theoretical underpinning for understanding which method, set of methods or so called best practices can be applied to specific case, for example, to calculate a specific result.It has been defined also as follows:1. "theanalysisof the principles of methods, rules, and postulates employed by a discipline"2. "the systematic study of methods that are, can be, or have been applied within a discipline"3. "the study or description of methods"

STEPS FOR RESEARCH MEHODOLOGYi. Identify the problems.ii. Review of literature.iii. Clarify the problems- (Specially identify the purpose of the study).iv. Clearly define terms and concepts.v. Define the populations.vi. Develop the instrmentaions plan.vii. Collect the data.viii. Analyses the data.

Research hypotheses

The primary intent of the study is to examine the conjectural statement that outsourcing strategy as an independent variable has an influence on performance variables depicted by sales turnover, profitability and customer satisfaction.Specifically the hypotheses are:H0: Outsourcing Strategy has no significant effect on sales turnover.H0: Outsourcing Strategy has no significant influence on profitability.H0: Outsourcing Strategy has no significant effect on Customer Satisfaction.Operatiolization and measurement of variablesa. Outsourcing Strategy: this was measured by the extent of the production activities that were subcontracted to other firms in the same industry group.b. Customer Satisfaction: this was measured in terms of the number of complaints/and its Customer repurchase patronage.c. Performance: sales growth gotten from the records of the organization and profitability index were used to measure performance.d. Core Competence: this was operational zed as the quality of organizations human and material resources devoted to the portion of her production process that is retained in-house and is considered very critical to her performancePopulation of the study, sample sizeThe sample for this study was drawn from the population of the organization. The organization employed approximately 50 employer.The purpose of this study is to examine the effects of outsourcing strategy on organizational performance using data. A survey research design was used. The Justification for the use of survey research for this study is that convenience with which the survey can be conducted and inferences for larger population can be made from the result. A five likert scale was used to seek information from top, middle and lower level managers of the firms on the wide range of key measurement variables of the study. In the words of Asika (2004) a sample is a subset of a universe or a part of a study population that is systematically selected to represent the population. The decision to use stratified sampling technique to pick the respondents is based on the fact that the decision to outsource often times is taken by the top management. Middle and lower level managers were included because they have direct contact with the production floor men and customers who are the final end of the production and distribution channel. More so, this technique of sample selection is particularly necessary when one want to apply research finding directly to a population Sample Size:-100 customerMEARUREMENTQuestion will be design and data will be collectedDATA COLLECTIONThe first step in working with the organizations was to obtain approval for distribution of the survey. I met with the manager of the organization to discuss the purpose of the research and obtain his consent to conduct the study. I was informed that the survey would be approved as long as the employees agreed. From there, I worked with employees of organization.

Data sources:-Primary and secondary dataPRIMARY DATAThe source of primary data related was collected from personal interview and questionnaire .For the purpose of survey primary data is collected in the form of questionnaire. Questionnaire is given to the selected employee. Employees were requested to fill the correct answers for the proper survey.SECONDARY DATAThe source of secondary data was internet, research papers books and company record.DATE ANALYSIS AND INTERPRETATIONAs the data being primary and secondary, it was collected by questionnaires and company records. Questionnaire was designed in such a way that it covers all the aspects of the problem under the study and to know the general information about the respondents.

Statistical tools used for analysis of collected data are: Microsoft Excel. The data is shown in the form of tables and charts.A frequency table comprising of five kinds of responses was prepared for each and mean score for each variable was calculated by using the formula.Mean score = (FSA x 5) + (FAX 4) + (FN x 3) + (Fo x 2) + (Fso x 1)NFSA = No. of respondents whose response was 'strongly agree'FA = No. of respondents whose response was 'agree'FN = No. of respondents whose response was 'neutral'FD = No. of respondents whose response was 'disagree'FsD = No. of respondents whose response was 'strongly disagree'N = Total Number of respondents The results so obtained were tabulated and have been reported in Chapter-IV. Further logical conclusions have been drawn, on the basis of which an attempt has been made to make recommendations.LIMITATIONS OF STUDYThough the research was conducted properly, the probability of error and biases kept is minimum. Still some errors occurred because of certain limitationsThese are follows:-A very short span of time for research.This is time consuming research method and the respondent did not have sufficient time for giving information foe such type of research.People did not give the proper response for questionnaire and interview, because of short time

Chapter - 4INTERPRETATION AND CONCLUSONSTable.1 showing the response of the question.

S.no.ResponseNumber of respondentsPercentage of respondents

1Strongly agree1224%

2Agree2346%

3Neutral918%

4Disagree4 8%

5Strongly disagree24%

Total50100%

Chart.1. Showing the table 1(Response of employees) Interpretation: From the above table it is clear that majority of people i.e. 46% are agree. Most of the employees are in favor regarding the strategy of outsourcing.

Table2:- Has your company ever outsourced any department or positions?S.no.ResponseNumber of respondentsPercentage of respondents

1Yes3060%

2No2040%

Total50100%

Chart.2. Showing the table 2 (Response of employees)

Interpretation:From the above table it is clear that majority of people i.e. 60% are agree. Most of the employees are in favor regarding the company outsourced any department/position.

Table3. How many employees does your company have?S.no.ResponseNumber of respondentsPercentage of respondents

10-5000%

250-1002448%

3100-1502652%

4150-20000%

Total50100%

Chart.3. Showing the table (Response of employees) Interpretation:From the above table it is clear that there is a very few difference between the 26% and 24%.but majority of people i.e. 26% are lie between the 100-150 towards the employees within the organization.

Table.4. the outsourcing done by my company was done by other companies as well in the same.S.no.ResponseNumber of respondentsPercentage of respondents

1Strongly agree00%

2Agree1020%

3Neutral2550%

4Disagree1020%


Total50100%

Chart.4. Showing the table 4(Response of employees)

Interpretation: From the above table it is clear that majority of people i.e. 25% feels that they will, The outsourcing done by his/her company was done by other companies as well in the same.

Table5. The department(s) was outsourced to increase the work quality for the companyS.no.ResponseNumber of respondentsPercentage of respondents


2Agree2040%

3Neutral918%

4Disagree48%


Total50100%

Chart.5. Showing the table 5 (Response of employees)

Interpretation: From the above table it is clear that majority of people i.e. 20% are strongly agree that The department(s) was outsourced to increase the work quality for the company. but majority of peoples that is 20% are agree and 9%are neutral so we cant ignore the values of agree not neutral.

Table6:-The outsourcing in my company was implemented because of the pressure from its customers.S.no.ResponseNumber of respondentsPercentage of respondents

1Strongly agree36%

2Agree1938%

3Neutral12%

4Disagree2550%


Total50100%

Chart6. Showing the table 6(Response of employees)

Interpretation: From the above table it is clear that majority of people i.e. 50% are disagree that The outsourcing in my company was implemented because of the pressure from its customers. But majority of peoples that is 25% are agree.Table7: The outsourcing in my company was implemented because of the pressure from its suppliersS.no.ResponseNumber of respondentsPercentage of respondents

1Strongly agree36%

2Agree24%

3Neutral12%

4Disagree2550%


Total50100%

Chart.7. Showing the table 7(Response of employees)

Interpretation: From the above table it is clear that majority of people i.e. 50% are disagree that The outsourcing in my company was implemented because of the pressure from its suppliers. But majority of peoples that is 35% are strongly disagree.

Table8. The morale of the remaining departments has increased after the outsourcing process.S.no.ResponseNumber of respondentsPercentage of respondents


2Agree2040%

3Neutral612%

4Disagree48%


Total50100%

Chart.8. Showing the table 8

Interpretation: From the above table it is clear that majority of people i.e. 40% are agree that The morale of the remaining departments has increased after the outsourcing process. But majority of peoples that is 12% are neutral and 12% are strongly disagree.

Table9: The outsourcing done by company was to restructure the company to improve its efficiency.S.no.ResponseNumber of respondentsPercentage of respondents


2Agree1122%

3Neutral1530%

4Disagree714%


Total50100%


Interpretation: From the above table it is clear that majority of people i.e. 30% are neutral that . The outsourcing done by company was to restructure the company to improve its efficiency. But majority of peoples that is 28% strongly

Table10.My company has become more profitable after the outsourcing.S.no.ResponseNumber of respondentsPercentage of respondents

1Strongly agree226%

2Agree244%

3Neutral 0 2%

4Disagree350%


Total50100%


Interpretation: From the above table it is clear that majority of people i.e. 30% are neutral that . company has become more profitable after the outsourcing . But majority of peoples that is 38% strongly disagree but we cant ignore the %age of strongly agree and disagree that is 6% and 4%

Table11: Outsourcing has enhanced my companys relationship with its partners.S.no.ResponseNumber of respondentsPercentage of respondents


2Agree2142%

3Neutral48%

4Disagree510%


Total50100%


Interpretation: From the above table it is clear that majority of people i.e. 30% are neutral that the Outsourcing has enhanced my companys relationship with its partners But majority of peoples that is 42 % agree but we cant ignore the %age of strongly disagree and neutral that is 10% and 8%.

FINDINGSMaking the right decision can add significantly to your organization's bottom line in terms of cost savings and increased efficiency. Outsourcing can bring fresh minds to your business, and it can also free time up for innovation and other vital tasks. However, making the wrong decision can put your business at a competitive disadvantage. Perhaps you'll lose control of proprietary information, or receive components that don't meet your organization's quality standards.So, how can you ensure that your organization makes the right decision?The Outsourcing Decision Matrix helps you see clearly which tasks, processes, or functions you should keep in-house and which can be safely outsourced. In this article, we'll examine the Outsourcing Decision Matrix and see how your organization can use it to make better outsourcing decisions.

You consider two important factors in outsourcing a task:1. How strategically important is the task to your business? Strategically important tasks are sources of competitive advantage.2. What is the task's impact on your organization's operational performance? Tasks which have a high impact on operational performance are those which, if done well, contribute greatly to the smooth running of the organization or, if done badly, greatly disrupt it.

CONCLUSIONOutsourcing strategy is at the center of the process of organizational changes and business structure. In this respect, these processes may be preceded by radical changes which lay the ground work for process re-engineering. The trend towards virtual corporations based on the relationship of cooperation among several firms starts with the identification and exploitation of the concept of core competences, in such a way that new advantages are obtained from specialization and that the customer receives added value superior to the levels previously offered. The contemporary relationship of firms to their business surroundings are conditioned by the changes in technology and the economic environment. Firms face these alterations to their surroundings by making qualitative change in the way that they Perform their activities and structure their organization. Outsourcing has a series of advantages and disadvantages which can be divided for analytical purposes into strategic and operational nature. The main strategic advantages are the creation of Competitive advantages, the reduction of risks, an improved long-term cost structure and an increase in organizational sale turnover and profitability. From a strategic standpoint, outsourcing allows the firm to concentrate its efforts on consolidating and expanding its core competences. On the other hand, among the operational advantages, we find an increase in efficiency as a result of activities being carried out by specialized firms and reductions in permanent staff, which then become variable costs related to the level of activity. As for the disadvantages of a strategic nature, the most important are the loss of control of activity done through outsourcing, the transfer of sensitive information, the possibility of exorbitant price increase by the suppliers at a future date, along with fluctuations in quality. The operational problems we have observed are difficulties related to the making of the contract arising from the effects on human resources. With respect to problems of an internal nature, it is certain that firms have turned to outsourcing as a short-term solution to avoiding the rigidities caused by labor laws. These firms may limit themselves by viewing outsourcing merely as a simple way of freeing themselves of permanent staff. From this perspective, outsourcing could represent a phenomenon of opportunity, while labor legislation is being in accordance with the needs of firms for more flexible organizations and more professional and motivated

Chapter5RECOMMENDATIONS

First of all, outsourcing usually reduces a companys control over how certain services aredelivered, which in turn may raise the companys liability exposure. Companies that outsource should continue to monitor the contractors activities and establish constant communication.Secondly, outsourcing strategy should come from the workers themselves. That is, workersshould be made to embrace the strategy before implementation so as to alley the fear of loss of Jobs. Also, successful implementation of an outsourcing strategy has been credited with; costincrease profitability and productivity. Therefore, organizations are system; enjoined to reduce the outsourcing strategy and improve their service delivery.Company managers agree that successful outsourcing requires a shift in their mindset, which means that they must manage their contractors and workers in order to improve on efficient service delivery. Integrating and managing a diverse, split work force embodying different corporate cultures and perhaps divided loyalties can be a daunting assignment compared to the more traditional approach to work force management.

Chapter:-6 REFERENCES[1] Gilley K. M., Rasheed A. Making more by doing less: an analysis of outsourcing and its effects on Firm performance. Journal of Management, Vol. 26, No. 4, 2009, pp.763-790.[2] Shy O., Stenbacka R., Strategic outsourcing. Journal of Economic Behavior & Organization, Vol. 50, 2003,pp.203-224.[3] Benjaafar S., Elahi E., Donohue, K. L.. Outsourcing via service competition. Management Science.Vol. 53, No. 2, 2007, pp.241-259.[4] Ren J. Z., Zhou Y. P. Call Center Outsourcing: Coordinating Staffing Level and Service Quality. Management Science, Vol. 54, No. 2, February 2008, pp. 369-383[5] Jae-Nam L., Miranda S. M., Yong-Mi K.. IT Outsourcing Strategies: Universalistic, Contingency, and Configurational Explanations of Success. Information Systems Research, Vol. 15, No. 2, June 2004, pp. 110-131.[6] Dekkers R. Decision models for outsourcing and core competencies in manufacturing. International Journal of Production Research, Vol. 38, No. 17, 2000, pp.4085- 4096.[7] Alp O., Erkip N. K., Gll R. Outsourcing Logistics: Designing Transportation Contracts Between a Manufacturer and a Transporter. Transportation Science, Vol. 37, No. 1, 2003,pp.23-39.[8] Ellram L., Billington C. Purchasing leverage considerations in the outsourcing decision. European Journal of Purchasing and Supply Management, Vol. 7, 2001, pp.15-27.[9] Bush A. A., Tiwana A., Tsuji H. An empirical investigation of the drivers of software outsourcing decisions in Japanese organizations. Information and Software Technology, Volume 50, Issue 6, May 2008, pp.499-510.[10] Bailey W., Masson R., Raeside R.. Outsourcing in Edinburgh and Lothians. European Journal of Purchasing and Supply Management .Vol. 8, 2002, pp.83-95.[11] Pagnocelli D.. Outsourcing scientific and technological activities. Proceedings of the ThirdInternational Conference on Systems Integration, Vol. 1, 1994, pp. 276285.[12] Quinn J.B.. Strategic outsourcing: leveraging knowledge capabilities.Sloan Management Review Vol.40, No. 4, 1999, pp. 9-22.[13] Marshalla D., McIvorb R., Lamming R.. Influences and outcomes of outsourcing: Insights from the telecommunications industry. Vol. 13, 2007, pp.245-260.[14] Lacity M. C., Willcocks L. P., & Feeny D. F.. The value of selective IT sourcing. Sloan Management Review, Vol.37, No.3, 1996, pp.13-25.15[15] Earl M. J., The Risk of Outsourcing IT. Sloan Management Review, Spring,1996, pp.26-33.[16] Fan T. J., Li H. Y., Chang X. Y., Liu L. P.. Model of business outsourcing Strategies based business process and contract term. Management Review(In Chinese), Vol. 19, No. 11, 2007,pp.55-62.[17] Lacity M. C., and Willcocks L. P.. An empirical investigation of information technology sourcing practices: Lessons from experience, MIS Quarterly, Vol. 22, No. 3, 1998, pp.363-408.[18] Choi T.Y., Hartley J.L.. An exploration of supplier selection practices across the supply chain. Journal of Operations Management, Vol.14, No. 4, 1996, pp.333-343.[19] Kennedy C., OConnor. Winning Major Bids, the Critical Success Factors. Policy Publications, 1997, Bedford.[20] Wadhwa V., Ravindran A. R.. Vendor selection in outsourcing. Computers & Operations Research, Vol. 34, 2007, 3725-3737.[21] Bhattacharya S., Behara R. S. and Gundersen D. E.. Business risk perspectives on information systems outsourcing. International Journal of Accounting Information Systems Volume 4, Issue 1,March 2003, pp. 75-93.[22] Malhorta, Y. (1997). An empirical analysis of the determinants of information systems productivityand the role of outsourcing policy. www.brint.com/papers/outsource. Virtual Institute of Information38-46

Outsourcing: making the rational decisionRespected Sir/Madam,

I am a student of MBA. I am working on a Strategy outsourcing company: nexus marketing jalandhar company. This Questionnaire is framed to get your view regarding the strategic outsourcing company nexus marketing jalandhar. This information will be kept confidential & would be used only for academic purpose. I hope that you will cooperate & will give genuine opinion.

1. Name :2. Age:17-35 [ ]35- 45 [ ] above 45 [ ]3. Sex:_________ [Male] ________ [Female]4. Marital Status:__________ [Married] ________ [Single]6. Income:Below 10,000 [ ] 10,000- 20,000 [ ] above 20,000[ ]7. Has your company ever outsourced any department or positions? Yes ( ) No ( )8. How many employees does your company have? 1-50 ( ) 50-100 ( ) 100-150 ( ) 150-200 ( )

9. The outsourcing done by my company was done by other companies as well in the same industry. Strongly agree ( ) Agree ( ) No opinion/Neutral ( ) Disagree ( ) Slightly Disagree ( )10. The department(s) were outsourced to increase the work quality for the company. Strongly agree ( ) Agree ( ) No opinion/Neutral ( ) Disagree ( ) Slightly Disagree ( )11. The outsourcing in my company was implemented because of the pressure from its customers. Strongly agree ( ) Agree ( ) No opinion/Neutral ( ) Disagree ( ) Slightly Disagree ( )

12. The outsourcing in my company was implemented because of the pressure from its suppliers. Strongly agree ( ) Agree ( ) No opinion/Neutral ( ) Disagree ( ) Slightly Disagree ( )

13. The morale of the remaining departments has increased after the outsourcing process. Strongly agree ( ) Agree ( ) No opinion/Neutral ( ) Disagree ( ) Slightly Disagree ( )

14. The outsourcing done by company was to restructure the company to improve its efficiency. Strongly agree ( ) Agree ( ) No opinion/Neutral ( ) Disagree ( ) Slightly Disagree ( )15.My company has become more profitable after the outsourcing. Strongly agree ( ) Agree ( ) No opinion/Neutral ( ) Disagree ( ) Slightly Disagree ( )16.Outsourcing has enhanced my companys relationship with its partners. Strongly agree ( ) Agree ( ) No opinion/Neutral ( ) Disagree ( ) Slightly Disagree ( )

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