Group members:Pham Thi Hanh- BAIU09018Trân Hoang Minh-BAIU09064Bui Tiên Đat- BAIU09039Nguyên Thuy Nga- BAIU0929

TOPIC: SERVICE OUTSOURCING – BENEFITS AND DRAWBACKS.

What is outsourcing? Benefits. Drawbacks. Service outsourcing: benefits and

drawbacks in Vietnam

Definition of outsourcing : a present business trend where in companies extend its services to other locations do as to distribute internal functions.

Outsourcing : Internal : Outsourcing can be done domestically External : Outsourcing can be done abroad

The key factors which have led to a growing trend of outsourcing are: Lack of expert-labor in some portions of the business process Availability of cheaper labor, whilst not comprising on the quality of

output Ability and feasibility to concentrate on the other crucial business process

External outsourcing: Where the work is done by unaffiliated companies (including independent foreign subcontractors, as in offshore outsourcing) is common for tradable services which can be standardized easily, such as back-office work.

Example :The use of call centers, print shops, outside marketers, outside labs, etc.  Additionally, professional advisers (such as attorney, accountant, banker, realtor, insurance agent, etc) are another illustration of external outsourcing.

Internal outsourcing: where the work is done by affiliates as in captive outsourcing is reserved for situation where strong control of a ‘core competency’ activity is vital.

Example: in research and development.

Types of outsourcing:

Outsourcing/offshoring

Where How

Domestica

llyAbroad

Affiliated

company

(internal)

Unaffiliated

company

(external)

Outsourcing

Offshoring

Captive

outsourcing

(Internal

outsourcing)

Offshore

outsourcing

(External oursourcing)

DEVELOP INTERNAL STAFF

CONTINUITY & RISKMANAGEMENT

STAFFING FLEXIBILITY OPERATIONAL CONTROL

REDUCED OVERHEAD

COST & EFFICIENCY SAVING

FOCUS ON CORE ACTIVITIES

BENEFITS OF OUTSOURCING

1.Focus on core activities : In rapid growth periods back office operation of the company will expand

start to consume resources Outsourcing allow refocusing on those business activities without sacrificing quality or service in the back-office.Example: A company lands a large contract that will significantly increase the volume of purchasing in a very short period of

time;Outsource purchasing.

2. Cost and efficiency savings :Advantage of outsourcing

- Prevent the size of your company from performing it at a consistent and reasonable cost.

Example: A small doctor's office that wants to accept a variety of insurance plans. One part-time person could not keep up with all the different providers and rules. Outsource to a firm specializing in medical billing.

3. Reduced Overhead :- Overhead costs of performing in back-office function are

extremely high. Consider outsourcing those functions which can be moved easily.

Example: Growth has resulted in an increased need for office space. The current location is very expensive and there is no room to expand. --- - Outsource some simple operations in order to reduce the need for office space.

Example, outbound telemarketing or data entry.

4. Operational Control :Departments that may have evolved over time into uncontrolled and poorly managed areas are prime motivators for outsourcing An outsourcing company bring better management skills to your company than what would otherwise be available.Example: An information technology department that has too many projects, not enough people and a budget that far exceeds their contribution to the organization. A contracted outsourcing agreement will force management to prioritize their requests and bring control back to that area.

5. Staffing Flexibility Outsourcing will allow operations that have seasonal or cyclical demands to bring in additional resources when you need them and release them when you're done.

Example: An accounting department that is short-handed during tax season and auditing periods. Outsourcing these functions can provide the additional resources for a fixed period of time at a consistent cost.

6.Continuity and Risk ManagementPeriods of high employee turnover add uncertainty and inconsistency to the operations Outsourcing will provided a level of continuity to the company while reducing the risk that a substandard level of operation would bring to the company.Example: The human resource manager is on an extended medical leave and the two administrative assistants leave for new jobs in a very short period of time. Outsourcing the human resource function would reduce the risk and allow the company to keep operating.

7. Develop internal staffA large project needs to be undertaken that requires skills that your staff does

not possess On-site outsourcing of the project will bring people with the skills you need into your company. Example: A company needs to embark on a replacement/upgrade project on a variety of custom built equipment. Your engineers do not have the skills required to design new and upgraded equipment. Outsourcing this project and requiring the outsourced engineers to work on-site will allow your engineers to acquire a new skill set..

For developing countries Advantages of global outsourcing

-opening up new export, growth and employment opportunities in various tradable service activities.- In a more dynamic sense, the trade-induced growth in income levels in developing countries will have further positive feedback effects for the rest of the world in terms of rising exports and increased tour-ism inflows. This is the age-old global-wealth-creation story which is a win-win game. There are already signs of this happening, with rapid growth in China and India leading to sharp increase in imports by these countries as well as increases in outbound tourism from them.

For developed countries Global outsourcing ought to lead to efficiency

gains for industrial countries by allowing them the opportunity to specialize in areas of their core competencies

2. About the security of company information

3. The cost switching is high

Economics recession

5. New workers

4. Bad for employee morale

6. Sense of responsibility

BUSINESS ENVIRONMENT

SECURITY AND POLITICAL STABILITY

LABOR FORCE

SOCIA-ECONOMIC STABILITY

http://www.wisegeek.com/what-is-outsourcing.htm

http://www.outsourcingintelligencenetwork.com/app/index.php?id=325

http://www.forbes.com/2010/03/12/vietnam-china-labor-business-manufacturing-outsourcing-oxford.html

http://www.orientsoftware.net/services/offshore-software-outsourcing/vietnam-outsourcing-destination.aspx

http://vnexpress.net/gl/vi-tinh/2007/07/3b9f8020/