OUTSOURCING & CONTRACT MANAGEMENT

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1.Levels of Outsourcing

- Project level, Program level, Division level

 

2. Factors to govern the decision to outsource

-  Nature of the work: critical nature

– Cost advantage: cost efficiency point of view, cost savings

– Faith of the customer in a vender

– Proven track record of the vender: feeling of trust

 

3.Models of outsourcing

- On-shoring-vendor -  located at  domestic

-Off-shoring –vendar far –off country

-Near-shoring- nearby country

-Home-sourcing- from home

 

3. Focus on core competencies

 -Cost savings:

-Quality:

-Flexibility:

- Time-to-market

- Transfer of risk to vendor

 

4. Reasons for outsourcing

• Cost saving 70%

• Quality/best practices 57%

• Flexibility/scalability 36%

• Focus on core competencies 35%

• Better skills 22%

• Transfer of risk 22%

• Lack of in-house expenditure 16%

 

5. What is being outsourced?

• Technology services

            • Software and application

• Infrastructure

• Telecommunication

• E-commerce

• Web security and solutions

• Web hosting, website designing, development and mtce.

• Business process

            • Back office operation

• Customer relationship management

• Sales and marketing

• Administrative support

• Payroll maintenance

• Finance and accounting

• HRM, training

• Logistics

• Medical transcription

• Security

 

6. Criteria for selecting an outsourcing vendor

• Quality commitment

• Cost

• Additional resources and capabilities

• Prior work

• Contract terms

• Confidentiality

 

7. Key to outsourcing success

• Setting the right expectations

• Benchmarking methodology

• Experience in handling outsourcing projects

• Internal resistance

• Last but not the least, the customer should exhibit trust towards its vendor, which in     turn should ensure transparency in its operations.

 

INDIAN CONTRACT ACT – 1872

A proposal when accepted becomes a PROMISE

Every promise forming the consideration for each other, is an AGREEMENT

An Agreement enforceable by Law is a CONTRACT

Compensation for loss or damage caused by breach of contract comes under Chapter VI

Communication, Acceptance and Revocation of Proposals comes under Chapter I

--->  When a party to a contract promises to do a certain thing at or before a  

        specified time and          fails to do, the contract, becomes voidable at the    

        option of the promisee, if the      intention of the parties was that time should be

       of the essence of the contract.

--->  In outsourcing, the vendor has complete control over the process, while in  

         contracting the customer has more control over the process

On-shoring	Outsourcing to a vendor that is located at a destination domestic to the customer
Off-shoring	Outsourcing to a vendor that is located in a far-off country
Near-shoring	Outsourcing to vendor in a nearby country

 

--->  Indian Contract Act Applicable from 1.09.1872 in whole India , except J&K

--->  A proposal when accepted becomes a promise, The person making the proposal

is called PROMISOR (Contractor), The person accepting the proposal is called PROMISEE

--->  What is Consideration? -->When, at the desire of Promisor, the Promisee has

done    something or promises to do something, such act of promise is called consideration.

--->  An Agreement enforceable by Law is a CONTRACT and An agreement not

enforceable by Law is said to be void.

--->  An agreement without consideration is void, unless : in writing and registered

between close relatives, Promise to compensate the promisor

--->  Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the later is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.