Outsourcing Success : The Management

Outsourcing of business processes has been a major and growing trend. Many major corporations have oursourced overseas and the next wave will include many SMEs moving outsourcing operations. The changes and implications for business are substantial. Based on the latest research and data, with extensive case studies, diagrams, and interviews with major corporations, this book provides a comprehensive analysis and highlights the best practice and pitfalls to avoid.

Alpesh B. Patel is a Financial Times Columnist and Bloomberg Television's award winning Internet and Online Trading Specialist and co-presenter of @Bloomberg and Bloomberg Money. He is also a Visiting Fellow in Business at Corpus Christi College, Oxford University.

List of figures and tables

x

About the authors

xii

List of abbreviations

xiv

Acknowledgements

xv

Introduction

1

(6)

What business process outsourcing means

7

(22)

Definition of BPO

7

(1)

What's the outsourcing imperative and does it work?

8

(4)

Outsourcing: an economic imperative

9

(3)

The BPO route map

12

(2)

Scope of outsourcing

14

(2)

Horizontal services

14

(2)

Vertical focused services

16

(1)

Market size

16

(3)

By region

16

(1)

By function

17

(2)

Drivers of BPO

19

(4)

Cost reduction

19

(1)

Focus on core operations

20

(1)

Shared infrastructure

21

(1)

Improvements in service level

21

(1)

Access to large talent pool

21

(1)

Process and product innovation

22

(1)

Leveraging multiple time zone

22

(1)

Changing customer needs

22

(1)

Improving the bottom line

22

(1)

Inhibitors

23

(2)

Services quality

23

(1)

Data security

24

(1)

Staff redeployment issue

24

(1)

Geopolitical risks

24

(1)

Cultural differences

25

(1)

Regulatory issues concerning offshoring

25

(1)

The chapters ahead

25

(4)

The BPO competitive landscape

29

(8)

Various segments of the BPO market

29

(5)

Classification by the identity of the players

29

(4)

Classification by the nature of the activities performed by the players

33

(1)

How the BPO market is evolving

34

(3)

Sourcing strategy: an imperative in the connected economy

37

(10)

Sourcing strategy: the next step after the business strategy

38

(2)

What are the drivers of a partnership-based world?

40

(4)

Increasing competitive thresholds due to globalization

41

(1)

Industrialization of service value chain

42

(2)

Various dimensions of strategic sourcing

44

(3)

Business goals

45

(1)

Internal capability

45

(1)

External market capability

45

(1)

Sourcing alternatives and models

46

(1)

Sourcing governance

46

(1)

How to develop a sourcing strategy

47

(41)

First step: strategic gap analysis

47

(2)

Second step: market and risk analysis

49

(1)

Third step: market engagement alternatives

50

(5)

Source internally

52

(1)

Sourcing of capabilities or deliverables

52

(1)

Sourcing of services or solutions

53

(2)

Fourth step: market engagement models

55

(8)

Proposed models for ``key activities''

56

(1)

Proposed models for ``potential activities''

57

(1)

Proposed models for ``fundamental activities''

58

(2)

Proposed models for ``common activities''

60

(3)

Fifth step: alternative scenario assessment

63

(2)

Final step: sourcing governance

65

(12)

Investment banks

77

(11)

Why

77

(11)

Guidelines for choosing outsourcing partners

88

(23)

Partner choices framework

88

(1)

Defining and refining goals

89

(1)

Requirements assessment

89

(1)

Location decision -- which country for what?

89

(4)

Zeroing in on the partner

93

(1)

In the long run

94

(3)

Considerations - smoothing out the road blocks

97

(1)

Key principles for win--win client relations

97

(2)

Trust and confidence

98

(1)

Responsiveness

98

(1)

Innovation

99

(1)

Best practices

99

(9)

The view of a CTO

108

(3)

What informs your decision to outsource?

108

(1)

What do you look for in a target company?

109

(1)

What kinds of activities have you not outsourced?

110

(1)

Would you consider outsourcing more? What are your fears about it?

110

(1)

The CFO perspective

111

(7)

Profit and loss perspective

111

(1)

Balance sheet perspective

112

(1)

Operational metrics perspective

113

(1)

Outsourcing the finance functions

114

(1)

The virtues and threats of virtual

114

(4)

Sourcing investment banking research and independent stock research

118

(9)

Regulatory changes altered the competitive landscape

118

(4)

Equity research functions: a strong case for outsourcing

122

(1)

Roadblocks in the way of outsourcing/offshoring research functions

122

(1)

How are firms using the services?

123

(1)

What operational structures?

124

(1)

Key pitfalls?

125

(1)

Learning from others' mistakes

125

(2)

The politics of outsourcing: trends, risks and strategies

127

(15)

The politics of offshoring

127

(1)

Dissecting the offshore debate

128

(4)

The economic impact

129

(1)

Quality

129

(1)

Security and regulatory compliance

130

(1)

Exploitation

131

(1)

Business risks

132

(1)

Assessing the impact so far

133

(4)

Strategies

137

(2)

Understand current and future stakeholder concerns

137

(1)

Develop a plan for displacement management

137

(1)

Make the case for offshoring

138

(1)

Ensure the highest standards

138

(1)

Align offshore plans with your CSR strategy

139

(1)

Conclusion

139

(3)

The future: outsourcing, innovation and your company's and country's future growth

142

(33)

Prosperity in the modern economy

142

(1)

Technological advances

143

(11)

Social

143

(3)

Science

146

(5)

Innovation

151

(3)

Globalization

154

(5)

Growth

155

(1)

Production

156

(3)

Sectoral change -- services

159

(5)

Productivity growth

159

(2)

Technology

161

(1)

Location

162

(2)

The knowledge economy

164

(3)

Changing skills

164

(2)

The global labor market

166

(1)

Key challenges for a modern economy -- the U.K.

167

(5)

Appendix 1: location summaries

172

(2)

Appendix 2: the political issues

174

(1)

References

175

(2)

Index

177

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Outsourcing Success : The Management Imperative

Summary

Author Biography

Table of Contents

Supplemental Materials