MIS Assignment 1

8/10/2019 MIS Assignment 1

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Executive Summary

Outsourcing is the buzzing word now-a-days; means subcontracting of works

to aired third party service provider.Its becoming more & more popular day by day

because it is offering less cost & high quality service and many other operational, technological

& financial benefits. And Information Technology Outsourcing (ITO is the most booming area

of outsourcing !hich is precisely three forth of the total outsourcing industry.

All the research organi"ations, specialists & futurists are sure about the fast for!ard move of the

Information Technology Outsourcing. #ost of the fortune $,%%% companies are tending to go for

outsourcing. In developed !orld nearly half of all businesses use offshore providers, and t!o

thirds plan to send !or' overseas in the near future. o, the future of this business is very bright.

IT Outsourcing is very much advantageous as a small business than many other businesses. Its

easy to finance. It has advantage on tariff, transportation, infrastructure & location, availability of

!or'force, )* hiring & training cost, and legal requirements. +esides, it gets ta eemption,

govt. incentives & stable government support. #oreover, it can use the !omen !or'force

rapidly & has a high success rate. o, it is the perfect time for our entrepreneurs to grab this

business !hich costs little but earns a lot.

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Objective

Outsourcing is the act of assigning part of a business process to a third party on a repeated basis.

It differs yet is similar from -roper mployment and Outtas'ing.

The outsourcing process has the aspect of employing a third party to perform an assigned tas'

!ithout the liabilities from /labor la!s./ This third party may be !ithin the same country as you

or be from a country a thousand or tens of thousand miles a!ay from you. 0ith this, you can

easily terminate your relationship !ith such party !ithout immediate legal precautions from the

/labor la!s/ if they fail to meet your standards. If they meet your standards or if you are satisfied

!ith their performance, you can again engage a contract !ith them to do another assigned tas',

preferably of similar nature.

The outsourcing process enables to en1oy having a reliable /regular employee/ !ithout the hassle

of ans!ering to the boundaries and rules set by the /labor la!s./ 2ou can continuously assign

tas's to this third party and epect results from them as you !ould be epecting from one of your

regular employees. )o!ever, if you feel that they are not able to perform such assigned tas's and

meet your standards, you can easily terminate your relationship !ith them.

Outsourcing therefore has t!o primary ob1ectives3

To get better results for the same or slightly higher cost.

To get labor at reduced cost but get the same or slightly better results.

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Methodology

Industry has a long tradition of subcontracting for products and services. The subcontracting,

currently called sourcing or outsourcing by I organi"ations is a natural evolution of this

subcontracting tradition. The primary functions of a modern Information ystems organi"ation,

ecept for strategic planning, can be either performed inhouse or outsourced to development,processing, net!or'ing or consulting providers4vendors. The evaluation of these

providers4vendors is usually based on some type of costvalue analysis. A basic method for such

costvalue analysis is the computation of a !orth inde. ince almost all outsourcing proposals

are required to provide a technical and managerial proposal and a separate cost proposal, the

!orth inde is computed as3

Worth Index = ( echnical Score ! Managerial Score" # $i%e &ycle &o't

This paper includes a detailed methodology for computing the technical score, managerial score

and life cycle costs for a 0orth Inde using both *5- and *56 approaches. The 0orth Inde

methodology presented in this paper is applicable to functional sourcing opportunities in si

areas3 the full I organi"ation (ecluding strategic planning, I development pro1ects, I data

center production, and I technical support, telecommunications, and architecture planning

support.

Out'ource rimary Mar)et *e'earch + Secondary Mar)et *e'earch

7ompanies have al!ays relied on research !hen it comes to ma'ing important business

decisions. The entire research effort revolves around t!o basic needs the need to ta'e good

decisions that bring positive results and the dire need to avert ris'. #eet these critical needs and

create a favorable environment for increased profitability !ith mar'et research.

econdary mar'et research ma'es deductions based on readily available information and

researched data. This brings in a convenience that you need not spend time on data collection and

processing. -rimary mar'et research is a fullfledged research !herein the entire research

process is freshly conducted in an elaborate manner for primary research.

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Introduction

The trend in outsourcing continues to gro! 8 both in the number and value of outsourcing

transactions and in the variety of services !hich are outsourced.

The pressures !hich lead organi"ations to outsource sho! no signs of slac'ening and cost

savings remains a ma1or incentive. )o!ever, other factors are increasingly influencing the

decision to outsource 8 access to innovation, increased speed to mar'et, and service quality are

proving equally as important as cost savings.

As the value of transactions has increased, so too has the range of outsourced services. #ost non

core services !hich organi"ations have traditionally provided internally 8 IT, finance and

accounting, )* and property management are no! commonly outsourced. The locations from

!hich services are provided have also changed 8 the attraction in outsourcing to offshore

locations such as India has soared.

*eports sho! that the fastest gro!ing sectors are business process outsourcing and business

process management. 5or many large IT suppliers outsourcing and process management are one

of the fe! areas to have flourished in the difficult mar'et of recent years.

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What i' out'ourcing.

Outsourcing involves the transfer of the responsibility for carrying out an activity (previously

carried on internally to an eternal service provider. The service provider in turn provides

services bac' to the customer against agreed service levels for an agreed charge. In many

outsourcings the transfer of the activity involves the transfer of staff and assets (see theemployment section belo!.

Outsourcing is often characteri"ed as having 9 distinct phases3

The customer transfers the eisting service to the service provider

The services are provided by the service provider

Termination4epiry, !hich may involve either

/ene%it' o% Out'ourcing

:o!er cost

'illed pertise

Time "one difference

5ocus on core competencies

Increased productivity and fficiency

;istribution of ris'

Improving customer service


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Outsourcing, in its early days, seemed possible only by larger companies !hich farmed out many

lo!end business processes. ince then, outsourcing has become more of a norm than an option.

Apart from the cost savings, outsourcing is seen as a strategic move that can allo! businesses to

gain a competitive advantage.

It certainly has opened up opportunities for organi"ations to utili"e s'ill sets and epertise that

they normally !ould not be able to access !ithout large investments. It has also become a savior

to startups and small businesses !hich have to !or' !ith modest capital.

At the lo!er end of the spectrum, outsourcing bac'end 1obs such as data entry4 processing,

customer support, payroll processing etc. have helped organi"ations save a staggering amount of

money. =o!, there are service providers across the globe !ho speciali"e in simple bac'office

services to highend services li'e manufacturing design and legal outsourcing, to name a fe!.

11 $oer co't'

:o!er costs are perhaps the prime benefit of offshore outsourcing. 2ou can get !or' done at a

fraction of the cost that you !ould have to spend locally, !hile getting better quality as !ell.

+ecause of the differences in pay and standard of living that eist bet!een Asian and 0estern

countries, labor costs are much lo!er in Asia. On an average, you can epect about >%? cost

savings if you outsource to countries li'e India.

12 S)illed Ex3erti'e

5inding s'illed resources is one of the biggest challenges faced by companies today, not to

mention the investment required to train employees and the attendant infrastructure required,

!hich can rapidly drain funds. Outsourcing frees companies from these hassles by providingaccess to s'illed resources at lo!er costs, !ith the additional benefit of not having the burden of

managing them directly.

1, ime 4one di%%erence

+ecause of the time "one difference bet!een Asian countries and the 0est, you can get your

!or' done !hile your business closes do!n in the evening. This is especially beneficial for

companies in the service industry that need to provide roundthecloc' customer support.

1- 5ocu' on core com3etencie'

As a company gro!s, administrative functions also gro!. #anaging bac'office operations and

administrative functions ta'es the time and energy out of any organi"ation. Outsourcing frees

companies from having to manage noncore functions, and puts the focus bac' on their core

competencies. ntrepreneurs and enterprises ali'e have benefited from outsourcing repetitive

and mundane tas's, and have had more time and opportunity to gro! their business.

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10Increa'ed 3roductivity and E%%iciency

Outsourcing not only brings cost advantages but can also improve the efficiency of business

operations. If your business goals are properly aligned !ith the deliverables in outsourcing,

productivity and efficiency are bound to increase. Outsourcing providers !ith the right epertise

and eperience can actually help streamline business processes and contribute to the bottomline.

16 7i'tribution o% ri')

0hen certain functions are outsourced, companies also distribute or do a!ay !ith the ris's

associated !ith running that particular function. 5or instance, if payroll management is eating up

your operational time and money, outsourcing it to a payroll services provider gives you the

freedom to focus your concentration on other core activities of the business.

1 Im3roving cu'tomer 'ervice

7ustomer service is paramount to any organi"ation. Through outsourcing you can service your

customers faster, provide better quality and decrease turnaround time.

18 9eogra3hical /ene%it'

+angladesh ITO centers enable to serve its customers globally, right no! !e are in a very cost

effective position, because according to @%% our neighbor India, )* cost increased $%%?. And

companies are loo'ing for ne! options, so !e are in a good geographical position also for

outsourcing.

1:On ime 7elivery

very +angladeshi ITO firm giving on time delivery according their agreement and producing

superb result.

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7i'advantage' o% Out'ourcing

:oss Of #anagerial 7ontrol

)idden 7osts

Threat to ecurity and 7onfidentiality

6uality -roblems

Tied to the 5inancial 0ell+eing of another 7ompany

+ad -ublicity and Ill0ill

21 $o'' O% Managerial &ontrol

0hether you sign a contract to have another company perform the function of an entire

department or single tas', you are turning the management and control of that function over to

another company. True, you !ill have a contract, but the managerial control !ill belong to

another company. 2our outsourcing company !ill not be driven by the same standards and

mission that drives your company. They !ill be driven to ma'e a profit from the services that

they are providing to you and other businesses li'e yours.

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2- uality roblem'

The outsourcing company !ill be motivated by profit. ince the contract !ill fi the price, the

only !ay for them to increase profit !ill be to decrease epenses. As long as they meet the

conditions of the contract, you !ill pay. In addition, you !ill lose the ability to rapidly respond to

changes in the business environment. The contract !ill be very specific and you !ill pay etra

for changes.

20 ied to the 5inancial Well>/eing o% another &om3any

ince you !ill be turning over part of the operations of your business to another company, you

!ill no! be tied to the financial !ellbeing of that company. It !ouldnBt be the first time that an

outsourcing company could go ban'rupt and leave you holdingthebag.

26 /ad ublicity and Ill>Will

The !ord /outsourcing/ brings to mind different things to different people. If you live in a

community that has an outsourcing company and they employ your friends and neighbors,outsourcing is good. If your friends and neighbors lost their 1obs because they !ere shipped

across the state, across the country or across the !orld, outsourcing !ill bring bad publicity. If

you outsource part of your operations, morale may suffer in the remaining !or' force.

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Out'ourcing in /anglade'h

Outsourcing refers to a company !hich contracts !ith other companies to do their mar'eting

1obs !hich !ould other!ise be performed by their inhouse employers. It reduces the cost of the

company and helps to epand the mar'et. These 1obs are handled by separate companies that

speciali"e in each service, and are often located overseas.

There are many reasons that companies outsource various 1obs, but the most prominent

advantage seems to be the fact that it often saves money. #any of the companies that provide

outsourcing services are able to do the !or' for considerably less money, as they do not have to

provide benefits to their !or'ers, and have fe!er overhead epenses to !orry about.

Outsourcing also allo!s companies to focus on other business issues !hile having the details

ta'en care of by outside eperts. #any outsourcing companies use modern advanced technology

that a company might not be able to afford. #oreover, outsourcing is an effective !ay if a

company !ants to epand as it can use outsourcing in various countries and build a foundation in

those countries.

+angladesh is relatively a ne! field in outsourcing. +ut it has high potential. ;ue to the

increased production cost in 7hina & India, +angladesh has emerged as a lucrative outsourcing

mar'et due to its lo! infrastructure and production cost and investment friendly legislation.

There are already more than thirty outsourcing companies in +angladesh ranging from giving

soft!are solutions, multimedia solutions, ecommerce and programming solutions all around the

!orld. 7ompanies li'e ;affodil oft!are :td, Anupam Infote' :td, and Cpload 2ourself

ystems, +angladesh Internet -ress :td. are some of the companies that are doing outsourcing in

soft!are and media solutions, graphics and animation solutions etc. There are call centers for

telecommunication companies and financial companies li'e ban's and the customers can get

help !ithin minutes from these call centers. +angladesh can be an ideal ground for buyers as it

can deliver manpo!er to help in getting product information and in synchroni"ing bet!een the

buyers and the company. There are many large foreign companies !ho !ant to epand and

+angladesh outsourcing companies can play a vital role in the epansion of the company. India is

considered a giant in outsourcing, +angladesh can also !or' side by side to help gro! outsource

mar'eting. The companies that are outsourcing in +angladesh can easily be reached by the

buyers from around the !orld and the scope of epansion !ill increase. As a result more buyers

can use the outsourcing in +angladesh in addition to India.

Today outsourcing is a gro!ing business. As time goes by it !ill become an indispensable part

for the buyers as !ell as the sellers. +angladesh has already stepped into the outsourcing !orld

and it surely can become an important outsourcing country.

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he 5uture o% Out'ourcing in /anglade'h

The +angladesh IT industry, despite being a ne! industry, represents a tremendous opportunity

to meet various IT needs of international companies around the !orld. In the last five years, the

IT industry of +angladesh has sho!n a considerable gro!th !ith an average yearly gro!th !ith

an average yearly gro!th rate of over D%? in oft!are and IT sectors.

;ue to increased interactions !ith international IT community, the IT sector of +angladesh has

already dra!n significant attention and has been positively highlighted in different mediums

around the !orld. 5or instance,


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,1 &urrent and 5uture rend' that ill a%%ect the Out'ourcing Mar)et

0ith the outsourcing industry emerging from the aftermath of the global recession, there are anumber of trends that give us a glimpse of the future3

Analysts are predicting that the industry !ill continue to fight shortterm cost pressures, and thatthere !ill be pressure on service providers for more fleible pricing contracts.

+uyers !ill see' more standardi"ed solutions from their outsourcing engagements, so they !ill

have to differentiate themselves through performance rather than pricing. )ence pricing

structures !ill be stabili"ed to some etent.

#any small alliances, focused on increased operational efficiencies, better quality control and

reduced bac'office costs, are being set up. This trend is going to continue.

Industry eperts predict that :atin America and urope !ill be the ne! outsourcing destinations

in the near future. +ra"il and *ussia !ill ma'e their presence felt in the global outsourcing

mar'et and 7hina !ill continue to move ahead. The rising price of oil !ill put pressure on

companies to ta'e advantage of technology and outsource !or' to remain profitable.

According to industry eperts, consumptionbased technologies that are delivered through the

cloud !ill gro!, as they are cost effective. ome analysts predict that uropean carma'ers !ill

start outsourcing their business. This !ould result in cars being developed by other companies

!hile being sold under their brand names. +ig pharmaceutical companies !ill launch ne! drugs

in the mar'et at a fraction of the current cost by partnering !ith India, 7hina, and *ussia in

molecular research and clinical testing so +angladesh could be the net here.

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,2 /anglade'h role in the out'ourcing indu'try

+angladesh continues to be the ma1or destination for outsourcing because it has been able to

evolve !ith changing needs. +AI (+angladesh Associations for oft!are and Information

ervice the ape body of +angladesh IT soft!are and service (IT & +-O companies , +77

(+angladesh 7omputer 7ouncil,+7(+angladesh 7omputer amity are !or'ing to gro! the

sector. +AI reported that +angladesh share in the global outsourcing mar'et is rising day by

day.

+angladesh still stands out for its customer service and efficiency, so its future is bright. Today,

customers are not only loo'ing at costeffective solutions for their outsourced business but also

for s'illed staff, enhanced productivity, service quality and business process ecellence. About

>%? of the population of +angladesh is under the age group of @F years. This group is very much

responsive to!ards technological advancement, eager to continue their o!n persona

development in the IT sector for improvement of their lifestyles visGvis the nation. !ith its

large population and multiples'illed people, +angladesh !ould continue to be preferred for bothbac'end and frontend outsourcing.

Opportunities for the +angladeshi outsourcing Industry. The gro!th of +angladeshi outsourcing

industry has been phenomenal. As mar'ets !orld!ide are becoming 'no!ledgeintensive,

+angladesh has evolved to become the most preferred destination for 'no!ledge services.

Hno!ledge -rocess Outsourcing may soon be the biggest revenue grosser in +angladesh. To

ma'e this +angladesh need to s'illed its manpo!er in language, -rogrammings, creative !or's

and others 1obs. Though +angladesh has 7hartered Accountants, #+As, ;octors, :a!yers,

*esearch Analysts, etc., !hich may strengthens its position in the 'no!ledge service industry.

o3 ten Strategic *ecommendation' %or ?egotiating an Out'ourcing ran'action

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;espite the fact that it is often a hot potato in certain quarters at certain times (particularly in

election years, outsourcing, or as the industry prefers to refer to it no! global sourcing,J is here

to stay and !ill li'ely continue to gro! eponentially. The economic imperatives of sourcing are

undeniable3 under the right circumstances, a business enterprise can engage an outside service

provider to perform an internal business or technical function or process at a much higher quality

level and at a lo!er cost.

ourcing transactions are highly comple and should be carefully negotiated. It !ill ta'e a good

bit of hard !or' to negotiate the service providers form agreement into a document that

appropriately balances the service providers interests !ith the buyers interests. ven though

they may not admit this at the beginning of the negotiations, service providers !ill usually

negotiate !ith you in good faith.

-1 State @our Ex3ectation' &learly

=ever lose sight of the fact that you are sourcing to accomplish t!o overriding ob1ectives3 (i to

have the sourced functions or processes performed at a higher level of quality by an eperienced

service provider that is in the business of performing those functions for many customers, and

(ii to have those functions performed more cost efficiently because the service provider has

much more scale and leverage (e.g. buying po!er than the company outsourcing the function.

very aspect of a sourcing transaction should use those t!o ob1ectives as a touchstone for the

service providers obligations. +egin every services Agreement !ith a very clear and ob1ective

statement of your companys ob1ectives as a buyer of sourced services.

-2 9et ?egotiating $everage a' Early a' o''ible

As noted above, service providers and their form service agreements tend to be quite onesidedfavoring the service provider. 2ou should consider using your o!n form of services agreement,

assuming that it has been prepared by an eperienced sourcing la!yer.

-, ?ail 7on @our er%ormance Metric' &learly A3 5ront

There are t!o broad categories of performance metrics that you should insist your service

provider meet3 first, broad, general performance quality standards and, second, specific, detailed

specifications.

-- Ander'tand What Service $evel Bgreement' (S$B'" *eally Bre

A buyer should al!ays include in the sourcing agreement specific performance levels for the thatare 'no!n as service level agreementsJ or :As.J :As, and their associated

credits4penalties,J are often the most heavily negotiated part of a sourcing deal.

#ost buyers of sourcing services, and often nonsourcing la!yers, do not really understand !hat

:As are or !hat their function is in the sourcing relationship. :As are not performance

!arranties per se but rather are benchmar's that trigger certain rights or credits to the client if

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they are not met, or, increasingly, certain bonuses or service provider credits if they are

materially surpassed. :A credits are typically more of a slap on the !ristJ of the service

provider than a severe remedy for poor performance. Their goal is to entice the service provider

to do !hat is necessary to correct a flagging performance measure.

-0 O%ten Ignored ran'ition 'ervice'C Entrance and Exit o% a 'ervice 3rovider

At the ris' of stating the obvious, transitional issues arise at the inception of the sourcing

relationship and at the end of the relationship. These issues, ho!ever, are ignored in service

agreements far too often.

The services agreement should contain a detailed description of ho! the services !ill be

transitioned to the service provider at the outset of the relationship and the functions the service

provider and the client are to perform. A detailed transition plan may be appropriate. 2ou might

!ant to as' that the timeframe for the transition schedule be etended for a certain period of time

(e.g. DF additional days !ithout incurring additional charges from service provider.

-6 7e%ining Service' reci'ely to Bvoid $oo3hole'

The services should be defined in the agreement very carefully and very precisely. 0e estimate

that over KF? of eecuted service agreements do not define the services !ith sufficientprecision. As selfevident as this sounds, many sourcing relationships run into trouble because

the scope of the services !as defined too narro!ly, broadly or ambiguously.

- 7onDt Ignore the Im3ortance o% Service rovider er'onnel

ourcing relationships sometimes involve the movement of employees from the client to the

service provider. The Agreement should specify any of your employees to !hom serviceprovider shall offer employment, if any, and certain required terms and conditions of

employment (e.g. credit for seniority purposes.

-8 9ive 7ue Bttention to *elation'hi3 Management

#any sourcing relationships run into problems simply because the parties communications lines

brea' do!n. The Agreement should set up a very !elldefined communications and disputeresolution matri.

Typically, clients and service providers are usually each required under the services Agreement

to appoint a pro1ect eecutive !hose responsibility is to manage the sourcing relationship created

by the Agreement. A management committee comprising an equal number of client and serviceprovider employees is sometimes formed in order to handle certain administrative aspects of the

relationship and certain disputes that may arise.

-: 5ee' and Ex3en'e' lug A3 /ac) 7oor Ex3en'e 9ouging

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5inancial issues are one of the most treacherous aspects of sourcing relationships.


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&onclu'ion

In conclusion, outsourcing is a business strategy used by companies, for reasons such as the lac'

of epertise, through the subcontracting of their business functions to outside organi"ations.

Outsourcing is receiving much response from companies all around the !orld these days, !ith

K%? of uropean companies already using it for reason such as to see' cash infusion, reduce ris'

and operating costs, etc.

7ompanies that offer services at lo! prices can be easily found. )o!ever, due to several ethical

concerns, some companies prefer the costlier route as the price difference could be deceptive

because the variation !ill only be in the initial cost. 7ompromise of customer data and vendor

reliability are one of the main ethical concerns companies tend to face, especially in offshore

outsourcing contracts.

Outsourcing is not the right tool for ever 1ob but it is a good tool for the right 1ob. There are a

couple of typical and traditional problems faced in outsourcing. -oor planning and lessthan

epected results are some of the problems faced by outsourcing players. There are solutions to

these problems ho!ever, there is no silver bullet and some situations can never be predicted.

All in all, the future of outsourcing appears to be fairly bright and positive. The information

technology era enables ne! outsourcing players to ta'e advantage of the different stages of an

organi"ationBs value chain. +esides that, there are also clear signs indicating the broadening

confidence in the outsourcing industry, !hich !ould ultimately lead to more companies adopting

the business strategy over an increasingly !ide range of business processes and functions.

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http://outsource2tt04.blogspot.com/2009/01/conclusion.htmlhttp://outsource2tt04.blogspot.com/2009/01/conclusion.html


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*e%erence

http344!!!.tech!orldbd.com4thefutureofoutsourcinginbangladesh4

!!!.some!hereinblog.net4blog4mdarifurrahman%%K4@$K%@%%

[email protected]!hyLoutsource4articles4benefitLoutsourcing.asp

http344!!!.google.com4urlEsaMt&rctM1&qMitNoutsourcingNmethodology&sourceM!eb&cd

http344!!!.mmmtechla!.com4@%$$4$$4$%4toptenstrategicrecommendationsfornegotiating

-age 18of 18
http://www.techworldbd.com/the-future-of-outsourcing-in-bangladesh/http://www.somewhereinblog.net/blog/mdarifurrahman007/29170200http://www.outsource2india.com/why_outsource/articles/benefit_outsourcing.asphttp://www.google.com/url?sa=t&rct=j&q=it+outsourcing+methodology&source=web&cdhttp://www.mmmtechlaw.com/2011/11/10/top-ten-strategic-recommendations-for-negotiatinghttp://www.techworldbd.com/the-future-of-outsourcing-in-bangladesh/http://www.somewhereinblog.net/blog/mdarifurrahman007/29170200http://www.outsource2india.com/why_outsource/articles/benefit_outsourcing.asphttp://www.google.com/url?sa=t&rct=j&q=it+outsourcing+methodology&source=web&cdhttp://www.mmmtechlaw.com/2011/11/10/top-ten-strategic-recommendations-for-negotiating

Documents

MIS Assignment 1