Outsorcing

Your name : Rezek Mohammed        Diploma and group : Master AEI International business

Date : 17/11/2022        Name of the speaker : Renata

Localisation : UPEC        Quality of the speaker : Student

Topic and definition of the main terms of the subject.

Topic : The smart city event.

According to the official website, the IoT Evolution's Smart City Event is focused on showing attendees how smart city innovations are changing the face of today's modern city, improving quality of life for citizens and driving enterprise opportunity.

Problematic

In terms of approaches to the question of outsourcing and offshoring for this company, in its value chain and its ecosystem?

Given the market and the products and services of the companies and experts met, do outsourcing and offshoring represent a threat or an opportunity for them and their sectors of activity?

The place and importance of outsourcing and offshoring for the issue of innovation and smart cities in relation to the activity and strategy that emerge from the intervention of the speaker?

Intervention plan

1. Convergence of team contributions.
2. Which results in – starting from the definition and knowledge provided by the course on outsourcing and offshoring – by the following additional elements:

3 major information/ theoretical references.

1. Convergence of team contributions :

• “The value chain describes the full range of activities which are required to bring a product or service from conception, through the different phases of production (…), delivery to final consumers, and final disposal after use.” (Porter). The Progress towards the downstream/upstream of the value chain means equipping oneself with the production tools to master one or more other business segments. This can lead to outsourcing and offshoring processes to allow the organization to free up resources to enable it to ensure the investments necessary for the acquisition of skills or a production unit or even to carry out a merger‐acquisition or a merger‐absorption.
• “Although a major reason for engaging in offshoring is to benefit from lower labor

costs, the economic benefits are not equal for all countries participating in offshoring. McKinsey Global Institute [2004] estimates that U.S. firms save 58 cents for every dollar’s worth of back-office services and IT jobs moved to India. They estimate that Germany, on the other hand, saves only 52 cents for every dollar it spends in India because of differences in language and culture that raise the cost of offshore work. Furthermore, most German offshoring is to Eastern Europe, where the savings are even lower because labor and infrastructure costs there are higher than in India. Thus, developments in offshoring need to be placed in a global perspective if they are to be fully understood.“ (Davis)

• “There has been considerable discussion in the literature of problems that arise in

outsourcing, and these also apply to offshore outsourcing; (...) These problems include structural, cultural, legal, and financial risks and costs. In the context of IT offshoring, additional problems may arise; these include loss of intelligence when customer relation activities are outsourced and the possibility of major offshore disasters. These problems may be exacerbated by the fact that IT activities are now so closely interwoven with organizational activities in general that it may be difficult to determine which activities indeed lie outside the organizational core. Because of the specific issues involved in offshoring IT activities, it seems necessary both to include elements of offshoring management in the general IS curriculum and to develop specializations relating to offshoring.”

1. Challenges companies face when implementing outsourcing and offshoring strategies, such as the differences in language, policies, culture, practices and the overall cost of these strategies.

• What practical modalities for offshoring and outsourcing : Proceed with caution ; Try to anticípate future challenges ; Choose well the location ; Perform a thorough analysis of the factors that have an impact in the decision making process, for example, using the PESTEL analysis (political, economic, social, technology, environmental and legal).
• Skills needed or to be acquired in terms of outsourcing and offshoring : Ability to adapt to new circumstances, good communication between parties, good research and verifying abilities, ability to respond fast to arising (and unforeseen) problems.

Essentials to remember

• Outsourcing and offshoring strategies are not for everyone, companies should know when and how to implement them correctly (according to their needs and resources) in order for them to be as efficient as possible and in order to achieve the best results for the company. Important factors to consider in this decision making process are: the overall cost this strategy will have (including transportation, logistics, cost differences) and the challenges they will face when outsourcing or offshoring to another country (differences in rules, policies, practices and language).
• Most companies agreed on the fact that outsourcing and offshoring strategies can mean a great investment for a company (since they can be very costly) and that these strategies should be implemented with care, in order for the company to achieve the cost reduction or expansion it may be looking for when implementing them.
• Companies recognize the importance outsourcing and Offshoring can have in a successful business strategy, however, they also emphasize the need to approach them with caution, (always considering the company’s needs and goals and the challenges they would face) before implementing them.

Warning points/Leverages

• Four companies were used in order to understand the point of you of companies about offshoring and outsourcing : VIALYTICS ; KUZZLE ; VOISINS-LE-BRETONNEUX ; ENOCEAN.

Personal observation or major points