Web-Based and Traditional Outsourcing: 1st Edition (Hardback) book cover

Web-Based and Traditional Outsourcing

1st Edition

By Vivek Sharma, Varun Sharma, K.S. Rajasekaran

Auerbach Publications

448 pages | 22 B/W Illus.

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Hardback: 9781439810552
pub: 2011-12-19
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In today’s increasingly competitive business environment, organizations must be able to adapt to the ever-changing business landscape where traditional business concepts no longer ensure success. The future will be driven by value and competing ideas—creating an environment where old alignments and equations will be replaced by a global network of projects and brand equity can evaporate quickly. Scale business relationships or perish is becoming the new mantra.

Written by a team of authors from the world's largest software outsourcer, Web-Based and Traditional Outsourcing explains how to leverage the Web to effectively manage and deploy people, resources, and competencies—regardless of their location. It introduces ground-breaking business models and frameworks that add significant value to outsourcing. This cutting-edge reference:

  • Integrates sourcing, acquisition, payment, and sales into a single end-to-end solution
  • Addresses outsourced project management, as well as the offer and acceptance of technology services
  • Details how to reduce costs and improve delivery times in software projects through reuse
  • Explains risk sharing, co-ownership, win-win business approaches, and equity-based contracts

Examining emerging trends and the future of outsourcing, the text provides authoritative insights into what are becoming the new ways of doing business. The authors supply the enterprise-wide vision of corporate capabilities needed to address contemporary outsourcing issues and include helpful tools for evaluating offshore vendors and determining the best location for your infrastructure needs.


I have known Vivek Sharma for more than 14 years … . We joined Infosys within a span of a few months and were part of the same group for 13 years. Over this period, we have worked together on multiple outsourcing projects … . He is one of the best technology consultants and always carried great respect among customers and peers alike. His advice was an authority of sorts on the subject.

—C. S. Prasad Subramanian, Technology and Management Consultant, Value Advisors Pvt. Ltd., Bangalore, India

… a deep study into web based and traditional outsourcing. The propounded business models and frameworks, mostly unused and unknown, are sweeping by far and justifiably patented. The future projections and trends are so far-reaching and carry relevance long term. … a work of art in writing style … many business related poetic renditions stretch the reader’s imagination in interpreting and decoding their somewhat sublime meanings.

—Liz Homewood, Program Producer, News & Media, U.K

Web-Based and Traditional Outsourcing by Vivek Sharma and Varun Sharma published by Infosys and CRC Press far exceeded my expectations and is definitely a recommended read for nearly all managers, but especially those in procurement, product development, IT, and anyone working on the provider side of the sourcing industry. The reason I recommend Web-Based and Traditional Outsourcing can be summarized into four main reasons.

  1. Sharma has presented outsourcing in a very balanced approach by addressing not only the value proposition but also the issues and concerns from the outsourcing recipient’s and provider’s perspective.
  2. Authoritative examples were used extensively as case studies across a wide range of business process outsourcing (BPO) applications as well as more typical IT outsourcing arrangements with more BPO examples than IT examples.
  3. The factors affecting the outsourcing value proposition for the recipient and provider were covered equally for every outsourcing model imaginable including insourcing, partnerships, onshore outsourcing, nearshore outsourcing, and offshore outsourcing.
  4. Anyone looking to develop new business models or re-imagine existing business models will find extensive insights and specific details on how web-based outsourcing is being used to by outsourcing recipients and providers to respond to economic downturn with new products, expanded value proposition and improved business operations.

At roughly 400 pages readers who are not involved in product development, procurement or IT management will still find a lot of value in picking up Web-Based and Traditional Outsourcing because the chapters are clearly organized so you can do some targeted reading. If you are already in a sourcing relationship or just considering the benefits of outsourcing, the sections on vendor selection, choosing a sourcing model, contracting, and ongoing operations including considerations for the various models, roles and responsibilities, and key success factors will be especially useful to you.

The Higher Ed CIO, March 2012

Table of Contents

Outsourcing Rudiments

Brief Background

The Goals of the Game

Integrate, Integrate, and Still Integrate

Outsourcing Basics

Insourcing versus Outsourcing

Offshoring versus Outsourcing

Business Process Outsourcing (BPO)

Types of Outsourcing

Growth of Outsourcing Worldwide

Outsourcing Benefits

The Strategic Call

The Various Approaches

Subject Matter Expertise

Technology’s Transformation Touch

The Cost Factor

Holistic Offerings

Speed of the Game

The Engagement Players

Resources Optimization

Round-the-Clock Operations

Demand Spikes

Hiring Consultants for Setup

Geography Is History

The Quality Imperative

Reuse of Projects, Resources, Experiences, Learning

Higher Control and De-Risking

The Many, Many Benefits


To Outsource or Not?

Realities and Myths

Strategy and Considerations

Strategy—Differs from Market to Market, Industry to Industry

Strategy—Is Outsourcing Part of the Solution or Not?

Costs Evaluation

Pre-Outsourcing Evaluation

Example—Outsourcing and Banks

Example—BPO Operations—Business and Technology Convergence

Example—IT Staff in an Accounting Firm—To Outsource or Not

Outsourcing—Not a Final Solution in Itself

What to Outsource?

Outsourcing Scope

What to Outsource?

Activities to Outsource?

BPO—What to Outsource?

Example—Outsourcing by Banks

Example—Public Relations (PR) Function Outsourcing

Example—End Customer Management through Customer Relationship Management (CRM) Solutions

Example—Corporate Receivables Outsourcing to Banks

Example—BPO Outsourcing of Sales Tax Compliance

Example—BPO—Outsourcing Support Operations

Example—Treasury Operations Outsourcing

Example—Tax Process Outsourcing

Miscellaneous Examples

Outsourcing to India

Asian Economy

Brief History of Outsourcing in India

Where to Outsource?—SWOT Analysis of Outsourcing to India

Benefits of Outsourcing to India

The Benefits, at a Glance

India—Preferred BPO Destination Top Outsourcing Cities in India

Indian Vendors’ Growth Challenges


Example—Awards to Indian BPOs

Potential Countries for Outsourcing

India versus Other Outsourcing Destinations

Vendor Selection

Vendor Classifications

Vendor Identification, Evaluation, Competence, Selection, and Management

Vendor Competence Evaluation

BPO-Specific Vendor Competence

Role of Technology in Vendor Selection

The Geographical Bearings of Buyers and Vendors and Some Generalizations

Vendor’s Past Performance History Check

Vendor Selection Checklist

Contracts—Types, Pricing Models, and Issues

Contract Types—Three Major Legal Structures

(1) Third-Party Outsourcing

(2) Parent–Subsidiary Relationship

(3) Build–Operate–Transfer (BOT) Model

Pricing Models

Fixed-Price Model

Transactional Pricing Model

Activity-Based Pricing Model

Cost-Plus Pricing Model

Gain-Sharing Model

Contract Drawing

Contractual Issues

Contractual Risks

Collaborations—Joint Ventures

Contract Termination

Transitioning—Postcontract Termination

Example—Antidumping U.S. Law

Operations—Execution, Challenges, Quality, Etc.

Operations Optimization

Operations Optimization through Vendor Expertise

Operations Execution


Example—BPO Operations—Mentor–Mentee Concept

Operational Costs

Example—Chief Financial Officer (CFO)—Role and Operations

Example—Bearings of Office Location

Vendor Management

Example—Outsourcing BPO Operations to India

Example—Outsourcing Customer Support

Operational Challenges

Example—Operational Challenges of Banks and Financial Organizations

Risk Management Operations—Contingency—Disaster Recovery (DR)

Quality Imperative


Web Outsourcing—Introduction

Internet—Brief Background

History of the World Wide Web

How People Discover Web Sites

Web-Based Outsourcing

Web Outsourcing Models and Frameworks

Business Model 1—Outsourcing over the Web Using Well-Defined Contracts

Business Model 2—Outsourcing over the Web without Contracts

Business Model 3—Strategic Tie-Ups—The Time Shares—Selling Time

Business Model 4—Strategic Tie-Ups—Making Customers and Employees Shareholders

Business Model 5—Time-Based Costs for Services and Products in Outsourcing

Business Model 6—For Every "n" Units Sold, Giving "m" Units Free

Business Model 7—Prepurchase in Bulk with Delivery Spread Out in Parts over a Period of Outsourcing Products and Services

Business Model 8—Big Projects Outsourcing to a Consortium

Business Model 9—Using Online Provider/Vendor to Manage the Internet Business (E-Business) Part/Component

Business Model 10—Automated Outsourcing Using Software Agents

Web Outsourcing Examples

Projects That Are Good Candidates of These Models

General Category of Applicable Projects

Miscellaneous Examples

Examples in E-Commerce

Examples—Potential Fields for Outsourcing to India

Web Outsourcing—Criteria for Success, Challenges

Web-Based Outsourcing Is Froth with Many Challenges

What Does NOT Qualify for Online Outsourcing

Market Readiness

Target Geography for Online Outsourcing

Vast Online Information Volumes

Transparency and Interoperability between Networked Systems


Time, Speed, and Uncertainty

Convenience and Self-Service

Personalization and Customization

Learn to Outsource, Even Online

High Demands of Online Users/Customers

Outsourcing Approach Online and Confidentiality


Online Vendor/Providers Specialized Domain, Business, and Technology Skills

Online Outsourcing Organization’s Specialized Business Skills

Risk Management

Employee Retention

Variable Pay

Access to Critical, Sensitive Data by Partners, Online Vendors, and Unauthorized Users

Language Nuances Online

Recession and Low Market Economic Conditions


Reverse Brain Drain

Reuse of Related Past Work, Knowledge, and Experience

Presentation Challenges Online for Enabling Quick Decision

Taking in Web-Based Applications

Readability Challenges Online

Personalization Challenges through Example—Video Rentals Survey

Acceptance of the Concept

Online Payment Systems and Electronic Data Interface (EDI)


"Business Transactions Challenges" of E-Commerce

Technical Challenges in E-Commerce Applications

The Rate of Proliferation of Internet/Intranet Outsourcing Portals

General Challenges Faced by the Internet

Need for Standards


Global Governance



Data Management


Strategic Cooperation



Limitations of Online Outsourcing

Web Outsourcing—Advantages

Business Advantages in the Virtual World of Web Outsourcing

Highly Skilled People and Resources

Reuse of Tools, Resources, Experiences

Borderless World

24/7 × 365 Operations


Strategic Focus

Vendors’ Geographical Spread

Personalized, Customized Services

Exponential Growth Prospects

Budgets for Setup and Working

Web—The Information Superhighway

Dematerialization—Migration of Manual/Paper Records to Electronic Media, Online

Leveraging from Outsourcing, Online

Financial Benefits

Cross-Currency Conversion Benefits

Higher Integration

Dell’s outsourcing strategy

Mass Customization

Dell—Some Salient Points

Reduced Learning Curve for Online Organizations

Brand Building

Substantial Changes in the Environment

Interoperable Communications

Quality and Continuous Benchmarking

Long-Term Career Paths

Reduced Liability and Risk

Knowledge Store

Linguistic Barrier Is Greatly Lowered

Repetitive Tasks and Labor Costs—Software Agents

Automation—Software Agents

Online Payments

Operational Efficiency

E-Commerce Benefits

Electronic Data Interchange (EDI) Advantages

Advantages of Outsourcing Online to India

Business-to-Business Payment Systems Online

E-Commerce—I-Way Communications

Electronic Payment Systems

Payment Gateways

Electronic Commerce and EDI

EDI—Some Definitions

EDI Concept

EDI—The Future

Clearing Automation through Truncation and Electronic Check Presentment (TECP)

Electronic Funds Transfer (EFT) Process

Financial Instruments

Tech—Electronic Token


E-Checks Working Mechanism

Smart Card

Example—EDI Usage by Sears Roebuck Organization


The Slowdown Scenario

Economic Turmoil

Indices Nosedive Worldwide—Growth Forecasts Downgraded

Forecasts Downgraded in India

Economic Situation in the United Kingdom during Slowdown

Budget Squeeze and IT Spend Declines

Example—Microsoft CEO’s View

Example—Nortel’s Bankruptcy

Example—Satyam Saga—Credibility Loss

Examples—Frills Cost Cutting in the IT and BPO Sector

Moody’s Estimates on Outsourcing to India

India and Other Countries as the Outsourcing Destination

Business Repositioning in Slowdown

Business Repositioning—Slowdown—CEOs Speak at Harvard Meet on Cause and Measures

Business Repositioning—IT Spend and Budget Slash during Slowdown

Business Opportunities during Economic Slowdown

Business Repositioning Due to Recession—General Strategies

Business Repositioning—High Exposure to Financial Services Sector


Example—Business Strategy of Infosys

Business Deals Contracting—Short- and Long-Term

Example—Infosys and Wipro Shortand Long-Term Contracts Ratio

Example—Airtel–IBM Long-Term Contract

Business Repositioning through Regional Shifts and Strategy

Strategy—Risk Mitigation through Geographical Spread

Mergers and Acquisitions (M & A)

M & A Examples

Governments—Support and Control Measures

Government of India Support and Policies

Examples of Organizations That Managed the Slowdown Successfully

Slowdown—Hiring, Layoffs, and Attrition


Layoffs during Slowdown

Indian Reverse Brain Drain

Economy and People’s Health

Personnel Retention

Example—Hiring by RBS of Lehman

India—Back to Hiring after the Economic Recovery


Intellectual Property and Data Security

Intellectual Property (IP)


Malicious Codes and Protection Methods

Security—Risks in E-Commerce

Network Security

Secure Messaging over Networks

Protection Mechanisms and Practices against Hacking and Security Risks

Encryption and Cryptography

Digital Signatures

Firewall—Infrastructure Protection

Reflections for the Future

History Revisited

The Generations

Reflections on the Future of Outsourcing

The India and China Axis

The Indian Equation

Misc. Outsourcing Countries


Outsourcing Highlights

Automation, Technology, and Outsourcing

Impact on Transportation

Examples of Future Business Forays of Outsourcing

Miscellaneous Examples of the Near Future of Outsourcing

The Bow and Final Words


Appendix: Enabling Infrastructure and Components

About the Authors

Vivek Sharma is a Post graduate in Management with Bachelor’s of Engineering in Computer Science. He has 18 Years of IT consulting experience, primarily with Infosys Technologies Ltd. He has managed consulting assignments across the U.S., the U.K., and Singapore. He is the founder of "Value Adders". He has filed 2 Patents in India, U.S. jointly with co-author Varun. These are discussed as business models in the Chapter – Web Outsourcing Models, Frameworks. He has authored an International Technical paper on "Dataguard" published in 2006 in the International IUOG Journal. He has additionally authored various thought papers for in-house use at Infosys. He has anchored various Corporate & in-house Trainings at Infosys. He has received various Corporate Awards at Infosys.

Varun Sharma is a Post graduate in Management with a Bachelor’s of Engineering in Computer Science. He has over 17 years of IT ITES consulting experience and is the founder of "Infinity Services".He has filed 2 patents in India, U.S. jointly with co-author Vivek. An expert in deploying cross domain knowledge, to drive down Attrition in Call Centers he has applied various innovative solutions and methods including Hypnosis, Autosuggestion/Suggestion techniques for Stress Management. He has analyzed IT/BPO share trends in the stock market using various financial tools. He has anchored various Corporate and in-house Trainings in IT/BPO processes, soft skills, and personality development and has the taken the IELTS exam to augment workshop programs.

About the Series

Infosys Press

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Subject Categories

BISAC Subject Codes/Headings:
BUSINESS & ECONOMICS / Management Science
BUSINESS & ECONOMICS / Information Management
COMPUTERS / Information Technology
COMPUTERS / Internet / General