global information systems presentation
TRANSCRIPT
Mul$na$onal companies that opened cap$ve centers in India since early 2001 230 Value of research conducted by Indian cap$ves of mul$na$onals in 2003-‐04 $800 million to $1 billion Value of research conducted by Indian cap$ves of mul$na$onals in 2008 (projected) $11 billion Call center seats 96,000 in 2003; 158,000 in 2004 Source: NASSCOM Strategic Review 2005 Evalueserve (2004) IT offshore revenue worldwide, April 2003-‐March 2004 $17 billion (almost half from India, almost onequarter from Ireland) (includes IT products shipped from Ireland) UN Conference on Trade and Development (2004) (as quoted on TurkishPress.com) percentage of world’s largest 1000 companies offshoring business process outsourcing 30 Value growth in offshore business process outsourcing worldwide (projected) $1.3 billion in 2002 to $24 billion in 2007
GSC
Accenture
EDS 1.80%
14.6%
40.20%
39.80%
26.90%
0.00 10.00 20.00 30.00 40.00 50.00
GSC
EDS
Accenture
CSC
Perot
% Growth over 5 Yrs Perot
CSC
Sales (Date: 2003)
Opportunity for Growth in Offshoring Value
IT offshore revenue worldwide April 2003-‐March 2004
$17 billion (half from India)
% of Fortune 500 Companies Offshoring 45%
Market value for OffShoring of IT Services. $32 billion
MulTnaTonal companies that opened in India since early 2001
230
Source: UN (2004), Evalueserve (2004), Scholl World Investment Report (2003), McKinsey & Co. (2003)
1. Offshoring to India Will SubstanTally Lower Direct Costs
2. Offshoring Requires EffecTve Management of Indirect Costs
3. Offshoring Requires Local Leadership and Sound ExecuTon
$355
$296
$168
$336 $336 $336
0
50
100
150
200
250
300
350
400
2004
2005
2006
Offshoring Domes$c
Cost Savings $168
Source: CIO, h`p://www.cio.com/ar$cle/29654/The_Hidden_Costs_of_Offshore_Outsourcing. Harvard Business School,. “Offshoring at Global Informa$on Systems., Inc. 2005.
Total Domes$c Labor Costs Per Year
($336)
Time Period Considered 10 Years
Total NPV (@10%) ($2,400.57)
Tax Savings (34%) $816.19
Total NPV A]er Tax ($1,584.38) Source: CIO, h`p://www.cio.com/ar$cle/29654/The_Hidden_Costs_of_Offshore_Outsourcing. Harvard Business School,. “Offshoring at Global Informa$on Systems., Inc. 2005.
2004 2005
Total Offshore Labor Costs Per Year
($75) ($75)
Costs Noted by GIS ($280) $221
Turnover – High A`ri$on ($9.82) ($2.32)
Language/Cultural Differences
($22.92) ($5.41)
Decrease in Produc$vity ($6.53)
Total NPV A]er Tax ($1,584.38) Source: CIO, h`p://www.cio.com/ar$cle/29654/The_Hidden_Costs_of_Offshore_Outsourcing. Harvard Business School,. “Offshoring at Global Informa$on Systems., Inc. 2005.
$1,584
$1,032
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800
Domes$c NPV
Offshoring NPV
(In Millions $)
Source: CIO, h`p://www.cio.com/ar$cle/29654/The_Hidden_Costs_of_Offshore_Outsourcing. Harvard Business School,. “Offshoring at Global Informa$on Systems., Inc. 2005.
1. Offshoring to India Will SubstanTally Lower Direct Costs
2. Offshoring Requires EffecTve Management of Indirect Costs
3. Offshoring Requires Local Leadership and Sound ExecuTon
0%
3%
6%
9%
12%
15%
18%
Week 1 Week 2 Week 3 Week 4 Week 5
Percen
tage of E
rrors
Upper Control Limit =
Lower Control Limit =
FuncTonal Program
Common Program Languages
Rare Program Languages
Strategic Programming
1. Offshoring to India Will SubstanTally Lower Direct Costs
2. Offshoring Requires EffecTve Management of Indirect Costs
3. Offshoring Requires Local Leadership and Sound ExecuTon
Communicate Vision & ObjecTves
Select Manager to Oversee the OperaTon
Develop Quarterly Monitoring Processes
TransiTon Period • Create Strong Bond Between Employees in India and the U.S.
Data • Install Encryp$on Sooware
• Keep Military and Government Work in the U.S.
Allies • Protect From Unjus$fied Regulatory Fines and Governmental Fees
Implement a Disaster
Recovery Plan
Daily Work Back-‐ups
Train Employees in DocumentaTon
1. Offshoring to India Will SubstanTally Lower Direct Costs
2. Offshoring Requires EffecTve Management of Indirect Costs
3. Offshoring Requires Local Leadership and Sound ExecuTon