Service Outsourcing in Indian economy

Service Outsourcing in Indian economy:

yeah , I am talking about Indian economy at this point. From recent times service outsourcing industries have gained more importance in Indian economy.

Outsourcing industries in Indian are gaining lot importance than the manufacturing plants, because of certain features of it.

Which type of business will be helping in exploitation of man power in India…?

The overview of Indian economy:

The economy of India is the fourth largest in the world by GDP measured on a purchasing power parity (PPP) basis and the twelfth largest in the world by market exchange rates.

India’s per capita income (nominal) is $1016, ranked 142th in the world, while its per capita (PPP) of US$2,762 is ranked 129th. In the late 2000s, India’s growth has averaged 7.5% a year, increases which will double the average income within a decade. Unemployment rate is 7% (2008 estimate). Previously a closed economy, India’s trade has grown fast.[8] India currently accounts for 1.5% of World trade as of 2007 according to the WTO. According to the World Trade Statistics of the WTO in 2006, India’s total merchandise trade (counting exports and imports) was valued at $294 billion in 2006 and India’s services trade inclusive of export and import was $143 billion. Thus, India’s global economic engagement in 2006 covering both merchandise and services trade was of the order of $437 billion, up by a record 72% from a level of $253 billion in 2004. India’s trade has reached a still relatively moderate share 24% of GDP in 2006, up from 6% in 1985.

Despite robust economic growth, India continues to face several major problems. The recent economic development has widened the economic inequality across the country..

Industry accounts for 27.6% of the GDP and employ 17% of the total workforce.Economic reforms brought foreign competition, led to privatization of certain public sector industries, opened up sectors hitherto reserved for the public sector and led to an expansion in the production of consumer goods.

Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering cost or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of land, labor, capital, technology and resources. Outsourcing became part of the business lexicon during the 1980s. It is essentially a division of labour.

Reasons for the development of outsourcing industries:

* Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through offshoring called “labor arbitrage” generated by the wage gap between industrialized and developing nations.
* Focus on Core Business. Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specilaised IT services companies.
* Cost restructuring. Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.
* Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement.
* Knowledge. Access to intellectual property and wider experience and knowledge.[14]
* Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.
* Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house.
* Access to talent. Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.
* Capacity management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.
* Catalyst for change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.
* Enhance capacity for innovation. Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.
* Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier.
* Commodification. The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of businesses access to services previously only available to large corporations.
* Risk management. An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.
* Venture Capital. Some countries match government funds venture capital with private venture capital for startups that start businesses in their country.
* Tax Benefit. Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country.

Under outsourcing industries ,Research & Development plays an important role…

The competitive pressures on firms to bring out new products at an ever rapid pace to meet market needs are increasing. As such, the pressures on the R&D department are increasing. In order to alleviate the pressure, firms have to either increase R&D budgets or find ways to utilize the resources in a more productive way. There are situations when a firm may consider outsourcing some of its R&D work to a contract research organizations or universities. Reasons why a firm could consider outsourcing are:

• new product design does not work
• project time and cost overruns
• loss of key staff
• competitive response
• problems of quality/yield.

The key drivers for R&D outsourcing are emerging mass markets and availability of expertise in the field. In this context, the two most populous countries in the world, China and India, provide huge pools from which to find talent. Both countries produce over 200,000 engineers and science graduates each year. Moreover both countries are low cost outsourcing  countries. Other strategic drivers for outsourcing R&D are access to expertise and intellectual property, filling gaps in the capabilities of the R&D function, managing risk better, reducing the time to market, and focusing on the core competence or activities of the firm.

Demonstrations or Seminars ? Which is better and influencing , which will help in maximizing sales,which is more educative?

Demonstrations or Seminars ?

Demonstration: Demonstrations are one of the important methods of sales promotion. Demonstration refer to explaining and showing the actual working of a product to the buyers. Seminars: Seminars are a form of publicity. In the case of seminars, representatives from different firms may participate , if the seminars are open to many organizations. Totally seminars are nothing but an intellectual talk among the people gathered at that place. According me, through the seller’s point of view, conducting a demonstration would be lot better than seminars. As seminars are nothing but intellectual talks , they are not appealed by all. But demonstrations will be more attractive and will be more educative. Usually conducting seminars is not an easy task. It requires lot of potential and it is also more expensive than conducting demonstration of commodities or services. As demos are nothing but educative acts , it gains more public image. People can really witness the working or the nature of the products manufactured by a firm.Demos also help buyers to know how to operate products such as machines and appliances. Totally I conclude that, demos are more effective than conducting seminars as the part of sales promotion. But seminars can be considered by the firms who take part more in rendering of paid services.

Combination of E-commerce and Agent Middleman as a new mode of marketing!

e-commerce

Combination of E-commerce and Agent Middleman!

I always think of implementing something new or in other words in always like to be innovative. Today my teacher was taking classes on ‘Business Marketing and mode of distribution of commodities’.; and as I mentioned before , a crazy new concept came into my mind and thought of blogging it in here..

Before I start to write about my idea, I would like to explain some of the basic terms that I am going to mention throughout my post.

Let me start with,

E-Commerce: commonly known as (electronic marketing) e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Electronic Commerce, commonly known as (electronic marketing) e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction’s lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

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And the term “Agent Middleman ” is nothing but a third party – typically a sales agent – who acts on behalf of a company when dealing with customers..

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As the name of the post suggests I am talking about a concept where there will be a combination of e-commerce along with agent middlemen for the establishment of new mode of distribution of commodities or business marketing.

Now let me come to the point,

Channels of distribution play a very important part in the marketing of goods. They serve as a bridge between the producers and final consumers, in the sense that it is through the channels or mode of distribution that the producers deliver their goods to the ultimate consumers. At this point a producer must adopt a perfect and most efficient mode or channel for distribution of the commodities he produced or for the rendering his service to the customers.

I thought using the combination of modern day technology along with the ancient business principle called middleman system or commonly called as ‘brokers’.

It is a new industrial concept under which the outsourcing of brokering system is done. A person who involves in this type of industry must establish an electronic system that is a website supporting his business. He must sign up with some of the well know business men to market their products with the help of his e-commerce system. That is, a person under this method of brokerage business must display the commodities manufactured by the companies with whom he ties up in his website. So the ultimate consumers or the customers can purchase their necessary goods through the broker by contacting him via his website. The broker must adopt fund transferring module to his web page so that the consumers can pay for the goods purchased via broker indirectly to the producers or to the manufacturers.

working of this concept is, the broker gets consumer requirements through the portal or website he designed and corresponds those to the producers. Goods and services will be delivered / rendered to the door step of consumers.

The main objectives of this concept are:

1. Reducing the distribution cost of commodities.

2. Avoiding bearing of risks in holding large stock of goods by the middle agents or the brokers.

3. Making goods or commodities produced by different manufactures display under a single system of trade.

4. Easy and secure transfer of funds between the producers, brokers and the final consumers.

5. development of transportation, insurance, banking, middle agent systems.

6. Avoiding sale of goods through factory outlets .

7. Educating people about the new products available in the market.

8. letting consumers buy goods at whole sale prices directly from their using using internet.

9. Increasing employment opportunities.

Use of this concept in large scale will also greatly influence on the development many other economical sectors such as Insurance industry, Banks, Transportation facility and the middle agents ..

When people buy commodities from the web portals created by the sales agents they will earn their part of income as commission from the producers and they will also gain income for advertising the commodities ..

Moving or delivery of the purchased goods will help in developing private transportation firms and insuring the products will gain importance to the insurance industries. Banks will finance the whole deal and hence we can witness the development in the field of banking also, this will generally create some employment opportunities. ..

More over the work will be very easy and a person can act as a broker for the sale of products or services directly from his crib and a consumer can obtain the goods required directly from a single website delivered to his door step. The whole concept will also create publicity for the products as the information spreads like wild fire over internet …