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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)
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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)
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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
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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.
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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
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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
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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
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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
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Leadership & Management
Direct Cost
Off shore to India
Indirect Cost
GIS Total Quality Management Model
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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
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Functional Program
Common Program
Languages
Rare Program
LanguagesStrategic
Programming
Leadership & Management
Direct Cost
Off shore to India
Indirect Cost
GIS Indian Service Design
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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
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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
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Quarterly Project Reviews Reduce Cost and Schedule Delays
Leadership & Management
Direct Cost
Off shore to India
Indirect Cost
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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
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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
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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
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