AMITY-DAY 8 29.10.09

8/14/2019 AMITY-DAY 8 29.10.09

1/104

AMITY DAY 8

29.10.09

8/14/2019 AMITY-DAY 8 29.10.09

2/104

Outsourcing in smaller

cities.

Nagpur

8/14/2019 AMITY-DAY 8 29.10.09

3/104

NAGPUR

With the development of properinfrastructure, leading IT firms areexpressing interest in the city.

Proper Infrastructure hasattracted leading IT firms

8/14/2019 AMITY-DAY 8 29.10.09

4/104

NAGPUR

Companies like GE, Microsoft, Patniand L&T Infotech have purchasedland for IT parks within the SEZs

around the MIHAN area

GE, Microsoft, Patni and L&TInfotech have purchased land

for IT parks

8/14/2019 AMITY-DAY 8 29.10.09

5/104

NAGPUR

Nagpur, which has always attractedpeople for its Mandarin oranges, hasnot left any opportunity to attract

foreign investment in IT-BPO sectors.

Oranges to IT-BPO

8/14/2019 AMITY-DAY 8 29.10.09

6/104

NAGPUR

Being an industrial, commercial andtransportation hub in Maharashtra,this city also marks the geographical

center of India.

City is industrial, commercialand transportation hub in

Maharashta

8/14/2019 AMITY-DAY 8 29.10.09

7/104

NAGPUR

The city's economic development startedwith the creation of the Multi-modalInternational Hub Airport at Nagpur

(MIHAN) project.The project which aims to exploit thecentral location of Nagpur and toconvert the present airport into

a major cargo hub with integratedroad and rail connectivity.

8/14/2019 AMITY-DAY 8 29.10.09

8/104

NAGPUR

This is considered to be the biggesteconomical development projectunderway in India in terms of

investment.Biggest economical

development project in terms of

investment.

8/14/2019 AMITY-DAY 8 29.10.09

9/104

NAGPUR

Shashikant Chaudhary, the VP, Head--Mobile BU of GlobalLogic, which is anoutsourced service provider with an R&D

center in Nagpur, says, "City'sinfrastructure is getting equivalent to bigcities with clean and big roads and 3 ITparks.

Air, Rail and Road

connectivity.Clean and big roads.3 IT parks.

8/14/2019 AMITY-DAY 8 29.10.09

10/104

NAGPUR

MIHAN project s expected to provideemployment to 100,000 people. Thishas 600 hectares of space reserved

for IT.Employment opportunity to 100,000

people.This has 600 hectares of space reserved

for IT.

8/14/2019 AMITY-DAY 8 29.10.09

11/104

NAGPUR

Many majors like Avendus, L&T,Mantri are building state-of-the-artfacilities here.

The infrastructure cost is also 30percent less than the other cities."Avendus, L&T, Mantri are building

state-of-the-art facilities.The infrastructure cost is also 30percent less than the other cities."

8/14/2019 AMITY-DAY 8 29.10.09

12/104

NAGPUR

Global Logic opened a center inNagpur in Nov. 2000.

The areas of its specialization includesLBS, Media and Messaging domains.

Being specialized in mobile productengineering, the company decided toprovide R&D services to mobileapplication development companies

from here.

8/14/2019 AMITY-DAY 8 29.10.09

13/104

NAGPUR

Chaudhary reveals, "In 2006, westarted our operations here afteracquiring Lambent Technologies,

which focused on mobile productengineering.They acquired Lambent

Technologies, which focused

on mobile productengineering.

8/14/2019 AMITY-DAY 8 29.10.09

14/104

NAGPUR

We had access to a lot of youngtalent here.

This city gives us an opportunity todevelop and nurture niche play andnot competing for resources withvery large companies.

Lots of young talent.Lack of competition with large

companies.

8/14/2019 AMITY-DAY 8 29.10.09

15/104

NAGPUR

There is still not much competition.

Everybody operating out of Nagpurhas his own space.

We have around 100 companies inNagpur --no super big companies.

If at all there is competition, it is to hiresenior level people."

8/14/2019 AMITY-DAY 8 29.10.09

16/104

NAGPUR

Being the city with the second highest studentpopulation in Maharashtra, Nagpur has 35engineering colleges along with a number ofengineering, MCA, M.Sc and engineering diploma

colleges within 250 km periphery.

A. Second highest studentpopulation in Maharashtra,

B. Has 35 engineering colleges.

C. A number of engineering, MCA,M.Sc and engineering diplomacolleges

8/14/2019 AMITY-DAY 8 29.10.09

17/104

NAGPUR

The total number of professionalsgraduating out of this region is morethan 10,000 per year.

Number of professionals graduatingout of this region is more than 10,000

per year.

8/14/2019 AMITY-DAY 8 29.10.09

18/104

NAGPUR

With one center and 250 employeesin Nagpur, GlobalLogic is upbeat tomake it a center of excellence in

mobile application and R&D.

The company is doing the business of$5-6 million annually from this

center. 250 employeesBusiness of $5-6 million annually

8/14/2019 AMITY-DAY 8 29.10.09

19/104

NAGPUR

An estimated $25.9 million (2007-08)for the combined IT-BPO exportsfrom Nagpur, suggests that the city

is all set to compete with otheroutsourcing destination of India.

An estimated $25.9 million

(2007-08) for the combined IT-BPO exports from Nagpur.

8/14/2019 AMITY-DAY 8 29.10.09

20/104

NAGPUR

More than 90 companies areoperating from the city andprominently provide IT services,

embedded software engineeringservices and healthcare BPO servicessuch as medical transcription,

according to KPMG.

More than 90 companies are operating.

IT services,Embedded software engineeringservicesHealthcare BPO services

8/14/2019 AMITY-DAY 8 29.10.09

21/104

NAGPUR

Being centrally located, Nagpuroffers tremendous advantages for ITand ITeS companies looking towards

emerging destinations.

8/14/2019 AMITY-DAY 8 29.10.09

22/104

NAGPUR

Cities like Jabalpur, Raipur, Bilaspur,Amravati, etc, which boast of astrong academic background and

hence a vast pool of highly skilledyoung manpower, fall within 150 kmof the city.

8/14/2019 AMITY-DAY 8 29.10.09

23/104

NAGPUR

The cost of doing business is muchlower as the cost of living iscomparatively lower than most other

cities.

Cost of doing business is muchlower.

Cost of living is comparatively lower

8/14/2019 AMITY-DAY 8 29.10.09

24/104

NAGPUR

This city is also an educational hubwith 27 engineering colleges, 11medical colleges and more than 40

graduate colleges for science andcommerce education.

27 engineering colleges,

11 medical collegesMore than 40 graduatecolleges

8/14/2019 AMITY-DAY 8 29.10.09

25/104

NAGPUR

The city attracts students fromnearby cities like Jabalpur, Amravati,Bilaspur and Raipur.

Educational infrastructureattracts students from nearby

cities,

8/14/2019 AMITY-DAY 8 29.10.09

26/104

NAGPUR

Although, the talent pool is largelyavailable here, English languageskills are currently average.

English language skills are currently

average.

8/14/2019 AMITY-DAY 8 29.10.09

27/104

NAGPUR

Experienced managerial talent is inrelatively short supply as studentsprefer to migrate to larger cities such

as Mumbai, Pune, and Hyderabad.

Managerial talent is in

relatively short supply

8/14/2019 AMITY-DAY 8 29.10.09

28/104

NAGPUR

Companies are making efforts toattract local talent to relocate toNagpur and internally develop people

to handle managerial responsibilities,says KPMGTraining and development activities

to build managerial talent.

8/14/2019 AMITY-DAY 8 29.10.09

29/104

NAGPUR

Nagpur is also witnessing a boom inthe construction of commercial officespace (IT Parks).

Approximately 110,554 sq.m. ofcommercial office space is expectedto come into the market by 2009,

KPMG reports.

Construction of commercial officespace

8/14/2019 AMITY-DAY 8 29.10.09

30/104

NAGPUR

The city is a hub for power generationand therefore has fewer breakdownsand outages compared with other cities

in Maharashtra. There are separate sub-stations for IT

companies and power for areas having

IT-BPO companies.Power supply support

8/14/2019 AMITY-DAY 8 29.10.09

31/104

NAGPUR

The city currently has three software parks, withanother planned to come up.

Besides, a SEZ has been notified as an integralpart of the MIHAN.

The SEZ is expected to have dedicated areasfor IT parks, healthcare, gems and jewelry,garments and textiles, and banking companies.

8/14/2019 AMITY-DAY 8 29.10.09

32/104

NAGPUR

The government has also taken someinitiatives to promote the growth ofoutsourcing to this city.

Government incentives

8/14/2019 AMITY-DAY 8 29.10.09

33/104

NAGPUR

Special capital incentives for companies inNagpur Municipal Corporation areas are30 percent of gross Fixed Capital

Investment with a ceiling of $ 50,000; Refund of octroi duty for 100 percent of

FCI for 9 years in municipal corporationlimits, 12 years for other areas,

Exemption from Electricity Duty.

8/14/2019 AMITY-DAY 8 29.10.09

34/104

NAGPUR

Empowered committee has alsoapproved the charging of sales tax ata minimum floor rate of 4 percent on

all IT products and non-IT productsessential for IT and IT-enabledservices units.

8/14/2019 AMITY-DAY 8 29.10.09

35/104

BANGLADESH

8/14/2019 AMITY-DAY 8 29.10.09

36/104

BANGLADESH

Recession-hit retailers in the US andEurope are increasing theirpurchases from Bangladesh as it is

able to supply garments at arelatively less price due to low labourcost and better economies of scale,

experts said.

8/14/2019 AMITY-DAY 8 29.10.09

37/104

BANGLADESH

Data collected by the Apparel ExportPromotion Council (AEPC), the bodyfor the promotion and facilitation of

garment-manufacturing and theirexports, show Bangladesh overtookIndia after August 2008.

Bangladesh overtook India afterAugust 2008.

8/14/2019 AMITY-DAY 8 29.10.09

38/104

BANGLADESH

While Bangladeshs share increasedby 10 per cent, Indias share wentdown by 3 per cent in the US market

in the same time period.

8/14/2019 AMITY-DAY 8 29.10.09

39/104

BANGLADESH

For India, the US, which imports $70billion worth of textile products everyyear, is the largest market,

accounting for nearly a fourth ofready-made garments exported.

8/14/2019 AMITY-DAY 8 29.10.09

40/104

BANGLADESH

Bangladesh has now taken the fifthposition, which was previouslyoccupied by India, in the list of

largest garment-exporting countriesto the US, pushing India to the sixthposition.

8/14/2019 AMITY-DAY 8 29.10.09

41/104

BANGLADESH

The AEPC estimates that exports ofready-made garments from India arelikely to fall 24 per cent short of the

$11.62 billion target for the currentfiscal and may total up to $8.78billion.

8/14/2019 AMITY-DAY 8 29.10.09

42/104

BANGLADESH

Interestingly, Bangladesh is expectedto touch $11 billion in the July-Juneperiod of 2008-09 period, compared

with $10.7 billion in the same periodof 2007-08.

8/14/2019 AMITY-DAY 8 29.10.09

43/104

BANGLADESH

Though China has always been acompetition for Indian exporters andit continues to remain the largest

supplier to both the US and Europe, itis the countries like Bangladesh thathave started taking over India.

8/14/2019 AMITY-DAY 8 29.10.09

44/104

BANGLADESH

On an average, Bangladesh has largefactories than India and they aremore productive and have low labour

cost, which is helping them inattracting buyers from the US andEurope,Incidentally, Bangladesh has duty-

free access to the EU market.

8/14/2019 AMITY-DAY 8 29.10.09

45/104

BANGLADESH

Indias labour rates are 129 per centhigher than that of Bangladesh.While the labour cost in India is 62

US cents per hour, it is merely 27cents in Bangladesh, according toAEPC.

Low cost labor versus India.

8/14/2019 AMITY-DAY 8 29.10.09

46/104

BANGLADESH

Since customers have started avoidingChina due to labour problems and thehigh cost of production there, the

business has shifted to alternativesources like Bangladesh as they aremore competitive, productive and deal

in large volumes, added Dutta.

8/14/2019 AMITY-DAY 8 29.10.09

47/104

BANGLADESH

Another point of view for Bangladeshand other countries like Vietnam,Indonesia, Combodia and Sri Lanka,

which are doing well in export ofapparels despite the ongoing globalfinancial

8/14/2019 AMITY-DAY 8 29.10.09

48/104

BANGLADESH

turmoil, is that they get cheap fabric from Chinaand also support their manufacturers.

All integrated textile countries are facing thisproblem what Indias going through today,

said DK Nair, secretary general, Confederation of

Indian Textile Industry (CITI)

8/14/2019 AMITY-DAY 8 29.10.09

49/104

BANGLADESH

India has to establish large factories andstrengthen its fabric production in order tocreate economies of scale to deal with the

current problems, added Nair.

About 97 per cent of fabric production inIndia lies in the decentralised sector.

8/14/2019 AMITY-DAY 8 29.10.09

50/104

INDIA BEAT CHINESE AT

PROSPERITY GAMEEconomic times -27.10.09

8/14/2019 AMITY-DAY 8 29.10.09

51/104

INDIA BEAT CHINESE AT PROSPERITY GAME

Based on composite prosperity index (9parameters).(Compiled by global think tank,Legatum Institute).

1. Economic fundamentals.

2. Environment for entrepreneurship.3. Innovation.

4. Access of quality education.

5. Democratic institutes.

6. Governance.7. Health.

8. Personal freedom.

9. Social capital and security.


8/14/2019 AMITY-DAY 8 29.10.09

52/104

INDIA BEAT CHINESE ATPROSPERITY GAME

The index ranks worlds 104countries, covering 90% of theworlds population.


8/14/2019 AMITY-DAY 8 29.10.09

53/104


India: 45th

China: 75th.

India ranked 5th on social capital(%citizens who are volunteer, give charity,help strangers, and who feel they can relyon family and friends.

8/14/2019 AMITY-DAY 8 29.10.09

54/104

Country -ranking

1. Finland.

2. Switzerland.

3. Sweden.4. Denmark.

9. US

13.UK


8/14/2019 AMITY-DAY 8 29.10.09

55/104


India has outperform China on severalindicators. Mostly non-economicfactors such as personal freedom-

speech,religion,national tolerance forimmigrants and ethnic and racialminorities.

China has outperformed India onseveral economic indicators.


8/14/2019 AMITY-DAY 8 29.10.09

56/104


Area of concerns for India are :quality of health care and educationfor which India is ranked 88th and 86th

respectively.

8/14/2019 AMITY-DAY 8 29.10.09

57/104

DEVELOPING AN EFFECTIVE GLOBAL

SOURCING STRATEGY

Background.

Methodology.

8/14/2019 AMITY-DAY 8 29.10.09

58/104

BACKGROUND

Over the past five years, interest in offshoreoutsourcing services has surged.

Customer support, IT operations, and even

research and development roles are movingto off-shore providers who offer similar, orideally better, functionality at a lower cost.

Outsourcing services areincreasing

8/14/2019 AMITY-DAY 8 29.10.09

59/104

BACKGROUND

In some cases, enterprises that haveinitially resisted this lower-costalternative are now re-evaluating

their strategy in an attempt to keeppace with competitors that haveembraced the offshore model.

Companies are working on lower

cost strategies to keep pacewith competition.

8/14/2019 AMITY-DAY 8 29.10.09

60/104

BACKGROUND

Many companies have succeeded inleveraging offshore outsourcingproviders to lower operational costs.

But there are far too many instanceswhere companies rush to pushresources and processes off-shore

without first developing a coherentsourcing strategy.Many companies do not have

coherent sourcing strategy onplace.

8/14/2019 AMITY-DAY 8 29.10.09

61/104

BACKGROUND

Failure to establish a managementframework with a clear set of projectgoals spells disaster for an offshore

outsourcing arrangement.

Project goals required to be well

defined .

8/14/2019 AMITY-DAY 8 29.10.09

62/104

A GLOBAL SOURCING

METHODOLOGY

FUNDAMENTAL

8/14/2019 AMITY-DAY 8 29.10.09

63/104

FUNDAMENTALREQUIREMENTS

8/14/2019 AMITY-DAY 8 29.10.09

64/104

A Global Methodology

The goal of any global sourcingmethodology should be to provide aframework that helps ensure a

trouble-free outsourcing experience.

Management framework is a

must to have trouble freesourcing experience.

8/14/2019 AMITY-DAY 8 29.10.09

65/104


The framework accomplishes this byestablishing a clear managementstructure and repeatable roles and

processes for project stakeholders.

Framework to have clearmanagement structure, roles

and processes.

8/14/2019 AMITY-DAY 8 29.10.09

66/104


Developing a global sourcingmethodology is vital for organizationsthat have yet to initiate a global

sourcing effort, but it is also animportant exercise for organizationsthat are interested in improving an

existing relationship.Developing a global sourcingmethodology is vital for

organizations

8/14/2019 AMITY-DAY 8 29.10.09

67/104


Project teams tasked with launching aglobal sourcing initiative are oftentemporary teams.

Thus it is critical that a methodology isin place that has greater longevity thanany individual member of the team.Longevity of teams to

manage the projects areessential than just any

individual member of theteam

8/14/2019 AMITY-DAY 8 29.10.09

68/104


An established methodology will enabletransient team members to quicklyunderstand the steps required to execute

a global sourcing initiative, the variousroles and responsibilities of teammembers, and the lessons learned byothers who have completed similar

initiatives.Methodology will help the teamsin understanding , execution of

project and knowledge sharing

8/14/2019 AMITY-DAY 8 29.10.09

69/104


The company should also establish aproject management organization(PMO).

A. Establish global sourcing PMO.(Client organization)

B. Create a project team..

C. Create structure.D. Define roles and responsibilities.

8/14/2019 AMITY-DAY 8 29.10.09

70/104


The project teams should work withthe global sourcing PMO to ensurethat the methodology, tools and any

associated templates are effectivelyapplied.

8/14/2019 AMITY-DAY 8 29.10.09

71/104


It is expected that a member of theglobal sourcing PMO will act as theproject manager during the launch of

global sourcing initiatives.

8/14/2019 AMITY-DAY 8 29.10.09

72/104

FIVE PHASES TO DEVELOPING GLOBALSOURCING METHODOLOGY

FIVE PHASES TO DEVELOPING GLOBAL

8/14/2019 AMITY-DAY 8 29.10.09

73/104


8/14/2019 AMITY-DAY 8 29.10.09

74/104


Five Phases Although there are a variety of sensible

approaches to developing a global sourcingmethodology, the following five phases must beaddressed at some point in the process:A. Feasibility.(Readiness &

evaluating business &technical processes)

B. Vendor Selection.C. Planning.D. Transition.E. Operations.

8/14/2019 AMITY-DAY 8 29.10.09

75/104

FEASIBILITY

During the feasibility phase, a project teamshould assess the organizations readiness forglobal sourcing.

In this phase, a wide spectrum of business and

technical processes are evaluated with the intentof determining candidates for off-shore sourcing.

A. Assess the organizationsreadiness .

B. Evaluate business and technicalprocesses.C. Determine candidates for offshore

sourcing.

8/14/2019 AMITY-DAY 8 29.10.09

76/104

FEASIBILITY

The feasibility phase is oftenconducted with strategic vendorswho can lend their expertise in

assessing global sourcing readiness.Feasibility should be analyzed onboth an annual and as-needed basis.A. Feasibility phase is often

conducted with strategicvendors.

B. Analyses both short & longterm needs.

8/14/2019 AMITY-DAY 8 29.10.09

77/104

FEASIBILITY

A sound approach is to develop a scorecardwhere the processes, resources and applicationscan be rated across important criteria such astechnical complexity, business risk, financial

impact and strategic importance of the potentialengagement.Processes, resources and applications are

rated across important criteria:A.Technical complexity,B.Business risk,

C.Financial impact.D. Strategic importance of the potentialengagement

8/14/2019 AMITY-DAY 8 29.10.09

78/104

FEASIBILITY

The global sourcing PMO shoulddevelop tools and templates toanalyze these factors and execute

decisions on which activities aresuitable for global sourcing and thetimeframes for migration.

Prioritize activities that are suitablefor global sourcing.

O S C O

8/14/2019 AMITY-DAY 8 29.10.09

79/104

VENDOR SELECTION

Vendor Selection

Once it has been determined that aspecific business or technical process

is suitable for the offshore model, thenext step is to select a vendor.

VENDOR SELECTION

8/14/2019 AMITY-DAY 8 29.10.09

80/104

VENDOR SELECTION

The global sourcing PMO and theproject team should work together tofind a vendor that has strengths in

the particular process or processesthat are candidates for outsourcing.

Joint responsibility of Global

sourcing PMO and the projectteam to find a vendor.

VENDOR SELECTION

8/14/2019 AMITY-DAY 8 29.10.09

81/104

VENDOR SELECTION

Both a single vendor bidding process and acompetitive bidding process should be in place.

The global sourcing PMO should develop thenecessary tools to enable the project team to

determine whether a single or multi-vendor bid isappropriate.

Decide what is more appropriate-

single vendor or multi-vendor

VENDOR SELECTION

8/14/2019 AMITY-DAY 8 29.10.09

82/104

VENDOR SELECTION

The PMO also should provide thetools for soliciting bids, and anapproach to making final vendor

decisions.

PLANNING

8/14/2019 AMITY-DAY 8 29.10.09

83/104

PLANNING

Planning

The planning phase lays the groundwork for a successful transition from

the onshore to the offshore model, oroperating environment.

PLANNING

8/14/2019 AMITY-DAY 8 29.10.09

84/104

PLANNING

During planning the organizationand the vendor team collaborate toensure that the many facets of the

transition to operations are wellprepared for and executed.Organization and the vendor

team collaborate to ensuretransition to operations are well

prepared for execution ofproject.

PLANNING

8/14/2019 AMITY-DAY 8 29.10.09

85/104

PLANNING

This is a key area that is oftenoverlooked by companies that rushinto an outsourcing engagement.

Failure to clearly define the scope,roles, responsibilities and timeframesof the transition inevitably leads to

friction.Clearly define the scope, roles,responsibilities and timeframes

of the transition

PLANNING

8/14/2019 AMITY-DAY 8 29.10.09

86/104

PLANNING

The PMO should manage theplanning phase with significantcontributions from the vendor and

internal resources.

PLANNING

8/14/2019 AMITY-DAY 8 29.10.09

87/104

PLANNING

For particularly complex or mission criticalengagements, you may want to considerengaging a third-party consulting group withexperience in global sourcing readiness.

These organizations can support by offeringsample project plans and checklists based ontheir experience.For complex engagements ,engage

third party consulting group with

competencies in global sourcingA.Preparation of Project plans.B.Preparation of Check list

TRANSITION

8/14/2019 AMITY-DAY 8 29.10.09

88/104

TRANSITION

Transition The transition phase executes much of what was

defined in the planning phase.

The organization and the vendor should preparefor the offshore transition and make adjustmentsto processes and procedures to enable optimalperformance in the new environment.

The Global sourcing PMO and thevendor prepare for offshoretransition .

TRANSITION

8/14/2019 AMITY-DAY 8 29.10.09

89/104

TRANSITION

The global sourcing PMO should oversee theseactivities to ensure best practices are beingadhered to. Concurrently, onshore and offshoreteam members must work together to execute

the plan established in the prior phase.

A.Best practices are being adheredto.

B.Project team onshore andoffshore team members worktogether to execute the plan.

TRANSITION

8/14/2019 AMITY-DAY 8 29.10.09

90/104

TRANSITION

The success of this phase is heavilydependent on tools and templatesthat ensure the project management

structure is sound enough to enableclear monitoring of progress as wellas issue identification and resolution.

Project management structure is soundenough to:

A.Enable clear monitoring of

progress.B. Issue identification andresolution.

OPERATIONS

8/14/2019 AMITY-DAY 8 29.10.09

91/104

OPERATIONS

Operations Assuming a smooth transition, the operations

phase should simply be business as usual.A core team from the organization should still

play a role in the day-to-day operations of theoutsourced operations.

But, this team should give the outsourcerenough space to do its job, and should

primarily be playing a management role.Core team from organization toplay a role in day-to-dayoperations and management

role.

OPERATIONS

8/14/2019 AMITY-DAY 8 29.10.09

92/104

OPERATIONS

Operation processes defined duringthe planning phase should informeach party of status and problem

resolution issues.

They should jointly know theStatus and resolve problem/

issues.

OPERATIONS

8/14/2019 AMITY-DAY 8 29.10.09

93/104

OPERATIONS

Specifically, project status indicators suchas service level agreements (SLAs) shouldbe monitored on a month-to-month basis.

The satisfaction of the organizationsaffected business units should also becarefully gauged during this phase.

Project status (SLAs) should bemonitored on a month-to month

basis.

OPERATIONS

8/14/2019 AMITY-DAY 8 29.10.09

94/104

OPERATIONS

Ultimately, the success of theoperations phase is dependent onthe communications structure and

management framework that wasestablished in the previous phases.

The success of the operationsphase is dependent on the

communications structure andmanagement framework that was

established in the previous phases.

8/14/2019 AMITY-DAY 8 29.10.09

95/104

The five-pronged approach for globalsourcing engagements is the resultof the Wipro Product Strategy and

Architecture (PSA) practicesexperience in supporting clients whoare exploring potential global

sourcing engagements.

8/14/2019 AMITY-DAY 8 29.10.09

96/104

WHAT SHOULD A GLOBALSOURCING STRATEGY

ADDRESS?

SOURCING STRATEGY

8/14/2019 AMITY-DAY 8 29.10.09

97/104

SOURCING STRATEGY

ADDRESS?

COST

8/14/2019 AMITY-DAY 8 29.10.09

98/104

COST

Costs A global sourcing strategy is oftenused to benefit from lower labor costs abroad.

But there are also other additional costs for abuying organization to bear that arent part of

domestic transactions. They include:

Multi-modal freight charges,Broker fees,

Bank fees,Taxes called duties,

Insurance.

LAWS

8/14/2019 AMITY-DAY 8 29.10.09

99/104

LAWS

Laws Global sourcing forces buyersand suppliers to choose one of threebodies of law to apply to their

contract:1. The law of the buyerscountry,

2.The law of the supplierscountry,

3.One applicable under a treatyaccepted by both countries.

CURRENCY

8/14/2019 AMITY-DAY 8 29.10.09

100/104

CURRENCY

Currency The buyer and the seller mustagree on a currency to use.

While some buyers insist on their own currencyfor simplicitys sake, prudent decisions consider

use of the suppliers currency when the buyerscurrency might strengthen relative to thesuppliers currency between the agreement andpayment dates.

Fluctuation of currency

LEAD TIME

8/14/2019 AMITY-DAY 8 29.10.09

101/104

LEAD TIME

Lead Time Lead time for globalpurchases is usually significantlylonger than for domestic ones. This is

due to:A. Ocean travel being slower than airtravel.

B. Customs clearance adding time

not involved in domestic sourcing.

LANGUAGE & CULTURE

8/14/2019 AMITY-DAY 8 29.10.09

102/104

LANGUAGE & CULTURE

Language & Culture If youreunfamiliar with the supplierslanguage and culture, you increase:

A. The risk of communicationchallenges,

B. Misunderstandings,C. Offensive or uncomfortable

encounters.

TRANSPORTATION

8/14/2019 AMITY-DAY 8 29.10.09

103/104

TRANSPORTATION

Transportation While domestic sourcingusually involves one shipping mode, globalsourcing involves multi-modal transportation astrategy for combining air, water, and ground

transportation to get goods from the supplier tothe port of the suppliers country to yourcountrys port to your dock.

Global sourcing involves multi-modal

transportation a strategy for combiningair, water, and ground transportation

PAYMENT METHODS

8/14/2019 AMITY-DAY 8 29.10.09

104/104

PAYMENT METHODS

Payment Methods Globalsourcing often involves paymentusing a letter of credit which requires

the involvement of both the buyersand suppliers banks.

Letter of Credit (LC)

Documents

AMITY-DAY 8 29.10.09