 Hello friends. This is Satish Parjani working as an assistant professor in Department of Mechanical Voluntary Literature of Technology. Today we are discussing the concept of outsourcing. Learning outcome. At the end of this session students will be able to explain and apply the strategic tool which is called outsourcing as outsourcing is one of the biggest and most important tool for entrepreneurs and any organization. What contents will be covering in this session? First, what is nature of outsourcing? What are examples of outsourcing? Benefits of outsourcing and what are the problems associated with outsourcing and what are the key references? First and foremost we will go with the introduction. Outsourcing is the contracting of facilitates that need to be undertaken on regular basis and which otherwise would be conducted within an organization. The term outsourcing is also sometimes used to describe the heaving of the activities from one country to another or from one place to another. This is most precisely called off-shoring and does not necessarily involve contracting out activities to another organization. Let us see first some examples then we will discuss the outsourcing. Today the big companies, Damiel Chrysler, Ford, General Motors, mostly design and assemble vehicles and their suppliers mostly make what goes into them. It has been observed that about two-thirds of the North America auto industry, $750 billion in value now resides with the supplier. Means I have personally seen one of the examples of big FMCG company which is known as in India, LG Electronics had done a lot of outsourcing activities major because of the reason that there is a peak or sudden demand during the seasonal times and many times the capacity was assured. So they cannot build the capacity only for seasonal item or some limited period of time. So decided to go for outsourcing. Support functions also have the outsourcing activity like HRM. Many aspects of HR has been outsourced. Selection, payroll, administration, development, career management, relocation and one more important what I have seen outsourcing activities is the training. The HR training generally it is outsourced. Now we can see the companies like Infosys, TCS, Tech Mahindra, they outsource the activities of the hiring of freshers. First they conduct the test for the test to conduct they hire some organization so that they can conduct on the basis the test on the basis of logical reasoning then aptitude then what you can say different types of what they feel are important technical rounds then they finally their management their employees take the decision whether to hire or not. So first initial phase it has been outsourced. I have told you now companies Infosys, Tech Mahindra now think of one manufacturing one Indian company which has done outsource in the past and what are the activities which they have done think it you must have read in some paper. Now some other examples some other examples watch I will say about outsourcing is Cisco systems. Cisco systems tightly coordinated value chain network of manufacturers subcontract and resource planners these are the one of the biggest advantage with the Cisco systems. General Electric has moved many manufacturing operations to countries like China has outsourced important support activities especially to India not and also we have seen General Electric now the big company like General Electric they have moved manufacturing operation to China they have moved some support activities to India. Now Indian also General Motors or General Electric they do outsource activity within the country now they can do outsourcing activity from General Electric Bangalore we can say to they can do it to Poonaya based some suppliers. Now we will discuss what are the benefits why outsourcing activities is being carried out. First and foremost the most important is they permit concentration of what an organization does best. Suppose the organization is having some core function of core manufacturing or core product from which they do not want to go out so if some other marketing people ask demand some other supply say the example of refrigerator an organization is dealing with high kind of refrigerators. Now there is certain demand after covid we can say a small a limited variety or small litter capacity of refrigerator will be manufacturers as they are sticking basically to the big refrigerators so they do not and on the second hand they do not want to lose market of the small litter product so they can outsource this activity and they can put their concentration on the big litter refrigerators allow utilization of packed expertise available in the market many times we see even we are very good at certain but some other some other organization some other factory is good at some so there is some expertise available so we can use their expertise we can use their knowledge skills and we can go for outsourcing we cannot have everything in our organization somebody is good at forging somebody is good at what you can say assembly of bolts nuts manufacturing so they can go ahead with that now the third most important is can offer significant of an immediate cost saving because they are into that business let us take the example of packaging industry we cannot have the packaging full setup in our factory so we can take the product from them so we can reduce our inventory we can see our overheads we can see and we can concentrate as we say on the main our main strong product the most organization these day think that they want to be more away from operational headaches what not is required in organization when it have to be run so many times if they if the new product they want to lose and if the trading kind of thing is done or trading what you can outsourcing kind can help them so they can just outsource that take it and marketing this we have seen the examples of outsourcing from big companies like samson big companies like apple big companies like general motors big companies like ford they do certain operations as part of outsourcing the most again important is avoids problematic labor relation and managerial efficiency we have seen many times read in the past in the newspapers that outsourcing activities helped to reduce the labor headaches now when there is any pandemic situation the laborers are out the inventory issues the labor issues are managed by that company not your core organization so labor relations labor problems labor everything can be is one of the solution to get it done outsource the most again important is assets downsounding and delaying means we are not going for investing investment in assets so this is one of the important benefit now let us see what are the problems of face by outsourcing these are the certain problems like loss of key skills and competencies when many times we outsource is we lose certain skills and we lose two competencies maybe that supplier outsource supplier can give our certain design certain our processes to other our competitors so there is unreliability of supplies the writing of poor contract can be they can use that loss of employee morale because our employee thinks that they are outsourcing they can fire us communication problems during outsourcing losing control or outsource activity because quality generally if it is front of us we can control if it's outside it cannot be controlled squeezing supplies too hard supplies exploration of dependency on them so these are the major problems associated with outsourcing what are key references the key references were used from empty MPTL and slide share nets and the book project management and control from we got a very important concept of outsourcing thank you thank you everybody