Business

Value Sourcing: Future of IT Outsourcing

Name: Value Sourcing: Future of IT Outsourcing
Author: Mr Alok Kumar
ISBN: 9781484946428

by Mr Alok Kumar

ISBN: 9781484946428

Description

History has shown several times and established the fact that the underlying factor for outsourcing is to lower cost and provide better value of the services and goods to the buyers to what they can achieve themselves. T... History has shown several times and established the fact that the underlying factor for outsourcing is to lower cost and provide better value of the services and goods to the buyers to what they can achieve themselves. There can be reasons of outsourcing done by organizations at a higher cost than what they themselves can achieve, however this will always remain a temporary form of outsourcing because the buyer will eventually either develop the skill in-house or find a better source which can give him cost advantage and higher value. Any service which was cost effective earlier but loses its cost advantage due to whatever reason gives way to another form of service which can do this task at a lower overall cost and higher value to the end consumer, thereby re-establishing the low cost and high value basis of outsourcing. More than two decades back, when outsourcing in manufacturing was highly established, it was difficult to understand how we could outsource anything that cannot be seen, checked and counted. Manufacturing was all about the physical piece being counted and checked and was very straightforward. Once I visited a vendor myself in Chennai who was making pins and brushes for the trucks my company was producing. These items were small and insignificant in nature as compared to the overall cost of the vehicle. The same component when imported was costing almost double to the cost of local manufacture by this vendor. In my discussion with the vendor, I figured out that the vendor was saving almost fifty percent of the cost he was billing us. I came back to my manager and asked him the reason for this outsourcing when we could save yet another fifty percent of the cost. He replied back that it was value sourcing and not outsourcing. My company would end up spending more on the manufacture of the component as much more higher value added work needs focus than these small ones. He also pointed out that the vendor I met did not have such a large complex, so man

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