multinational companies that opened captive centers in india since early 2001 230 value of research...

Alternative Title

GSC

Accenture

EDSGSC

EDS

Accenture

CSC

Perot

0.00 10.00 20.00 30.00 40.00 50.00

1.80%

14.6%

40.20%

39.80%

26.90%

% Growth over 5 YrsPerot

CSC

Sales(Date: 2003)

Opportunity for Growth in Offshoring Value

IT offshore revenue worldwideApril 2003-March 2004

$17 billion(half from India)

% of Fortune 500 Companies Offshoring 45%

Market value for OffShoring of IT Services. $32 billion

Multinational companies that opened in India since early 2001

230

Situation Analysis

Source: UN (2004), Evalueserve (2004), Scholl World Investment Report (2003), McKinsey & Co. (2003)

GIS Should Offshore to India to Remain Market Leader

1. Offshoring to India Will Substantially Lower Direct Costs

2. Offshoring Requires Effective Management of Indirect Costs

3. Offshoring Requires Local Leadership and Sound Execution

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

Costs Estimated by GIS(In Millions $)

2004

2005

2006

0

50

100

150

200

250

300

350

400 $355

$296

$168

$336 $336 $336 OffshoringDomestic

Cost Savings

$168

Source: CIO, http://www.cio.com/article/29654/The_Hidden_Costs_of_Offshore_Outsourcing.Harvard Business School,. “Offshoring at Global Information Systems., Inc. 2005.

NPV of Domestic Costs(In Millions $)

Total Domestic Labor Costs Per Year ($336)

Time Period Considered 10 Years

Total NPV (@10%) ($2,400.57)

Tax Savings (34%) $816.19

Total NPV After Tax ($1,584.38)Source: CIO, http://www.cio.com/article/29654/The_Hidden_Costs_of_Offshore_Outsourcing.Harvard Business School,. “Offshoring at Global Information Systems., Inc. 2005.

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

Additional Costs and NPV of Offshoring (In Millions $)

2004 2005

Total Offshore Labor Costs Per Year ($75) ($75)

Costs Noted by GIS ($280) $221

Turnover – High Attrition ($9.82) ($2.32)

Language/Cultural Differences ($22.92) ($5.41)

Decrease in Productivity ($6.53)

Total NPV After Tax ($1,584.38)Source: CIO, http://www.cio.com/article/29654/The_Hidden_Costs_of_Offshore_Outsourcing.Harvard Business School,. “Offshoring at Global Information Systems., Inc. 2005.

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

NPV Cost ComparisonDomestic V.S Offshoring

Domestic NPV

Offshoring NPV

$0 $200

$400 $600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$1,584

$1,032

(In Millions $)

Source: CIO, http://www.cio.com/article/29654/The_Hidden_Costs_of_Offshore_Outsourcing.Harvard Business School,. “Offshoring at Global Information Systems., Inc. 2005.

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

GIS Should Off-Shore to India to Remain Market Leader

1. Offshoring to India Will Substantially Lower Direct Costs

2. Offshoring Requires Effective Management of Indirect Costs

3. Offshoring Requires Local Leadership and Sound Execution

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

GIS Total Quality Management Model

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

Week 1 Week 2 Week 3 Week 4 Week 50%

3%

6%

9%

12%

15%

18%Pe

rcen

tage

of E

rror

sUpper Control Limit =

Lower Control Limit =

C-Chart of Errors Per Program Code Per Week

Functional Program

Common Program

Languages

Rare Program

LanguagesStrategic

Programming

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

GIS Indian Service Design

GIS Should Off-Shore to India to Remain Market Leader

1. Offshoring to India Will Substantially Lower Direct Costs

2. Offshoring Requires Effective Management of Indirect Costs

3. Offshoring Requires Local Leadership and Sound Execution

High Employee Morale and Public Relations Ensures Productivity

Communicate Vision & Objectives

Select Manager to Oversee the Operation

Develop Quarterly Monitoring Processes

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

Quarterly Project Reviews Reduce Cost and Schedule Delays

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

Relationships Reduce Cost & Schedule Delays

Transition Period• Create Strong

Bond Between Employees in India and the U.S.

Data• Install Encryption

Software• Keep Military and

Government Work in the U.S.

Allies• Protect From

Unjustified Regulatory Fines and Governmental Fees

Leadership & Management

Direct Cost

Off shore to India

Indirect Cost

Mitigate Political Instability Within India

Implement a Disaster

Recovery Plan

Daily Work Back-ups

Train Employees in

DocumentationLeadership & Management

Direct Cost

Off shore to India

Indirect Cost

GIS Should Off-Shore to India to Remain Market Leader

1. Offshoring to India Will Substantially Lower Direct Costs

2. Offshoring Requires Effective Management of Indirect Costs

3. Offshoring Requires Local Leadership and Sound Execution