Following latest 2009 McKinsey &
Company publications, India leads the world in providing offshore services in
business and technology, with revenues of $58 billion in 2008, out of a global
total of $80 billion. McKinsey estimates this is just the beginning: the global
market for offshore business and technology services could grow to about $500
billion by 2020.
(SOURCE: Strengthening
India's Offshore Industry)
We at Audit Department can assist you in
defining your sourcing strategy and can evaluate your “Dynamic Sourcing”
options. Whether off shoring, outsourcing, out tasking, or any combination; there
is a bunch of possible reasons why to review your current sourcing strategy:
- Cost savings.
The lowering of the overall cost of the service to the business. This will
involve reducing the scope, defining quality levels, re-pricing,
re-negotiation, cost re-structuring. Access to lower cost economies
through off shoring called "labor arbitrage" generated by the
wage gap between industrialized and developing nations.
- Focus on Core Business. Resources (for example investment, people, and infrastructure)
are focused on developing the core business. For example often
organizations outsource their IT support to specialised IT services
companies.
- Cost restructuring. Operating leverage is a measure that compares fixed costs to
variable costs. Outsourcing changes the balance of this ratio by offering
a move from fixed to variable cost and also by making variable costs more
predictable.
- Improve quality.
Achieve a step change in quality through contracting out the service with
a new service level agreement.
- Knowledge.
Access to intellectual property and wider experience and knowledge.
- Contract.
Services will be provided to a legally binding contract with financial
penalties and legal redress. This is not the case with internal services.
- Operational expertise. Access to operational best practice that would be too difficult
or time consuming to develop in-house.
- Access to talent.
Access to a larger talent pool and a sustainable source of skills, in
particular in science and engineering.
- Capacity management. An improved method of capacity management of services and
technology where the risk in providing the excess capacity is borne by the
supplier.
- Catalyst for change. An organization can use an outsourcing agreement as a catalyst
for major step change that can not be achieved alone. The outsourcer
becomes a Change agent in the process.
- Enhance capacity for innovation. Companies increasingly use external knowledge service providers
to supplement limited in-house capacity for product innovation.
- Reduce time to market. The acceleration of the development or production of a product
through the additional capability brought by the supplier.
- Commodification.
The trend of standardizing business processes, IT Services and application
services enabling businesses to intelligently buy at the right price.
Allows a wide range of businesses access to services previously only
available to large corporations.
- Risk management.
An approach to risk management for some types of risks is to partner with
an outsourcer who is better able to provide the mitigation.
- Venture Capital.
Some countries match government funds venture capital with private venture
capital for startups that start businesses in their country.
- Tax Benefit.
Countries offer tax incentives to move manufacturing operations to counter
high corporate taxes within another country.
Audit Department can help you to validate
relevance and impact of your sourcing options and can assist you implementing
change.
Our Country offices in London, Hamburg and Milan will be looking forward to your individual requests and can help you in
defining the ideal package for your individual requirements.
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