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Analysis: Outsourcing Trends in the Indian Industry

The objective of the study is to understand the trends in outsourcing in Indian industries.

The study consists of two parts:

• Analysing the outsourcing trends from financial data of companies

• Carrying out a field study to understand the outsourcing practices in Indian industries

Analysing the outsourcing trends from the financial data of companies

Methodology

Identify an industry (e.g., the automobile industry) and select at least three listed (public limited) firms (Tata Motors, Mahindra & Mahindra Ltd, Maruti Udyog Ltd, Hindustan Motors, etc.) from the selected industry. Collect data on the following two parameters for the last 10 financial years for all the companies in the study:

• Raw material consumed: RM

• Cost of sales: CS

• Outsourcing ratio = RM/CS

The electronic database Prowess maintained by CMIE can be used to collect the relevant data. Alternatively, visit the Websites of the companies for downloading the annual reports of the respective companies.

Observe the trend in outsourcing ratio for different firms in the same industry. One expects that, with the present trend in outsourcing, the outsourcing ratio should increase over a period of time.

Field study to understand the outsourcing practices in the Indian industry

Methodology

Identify a company in your neighbourhood and interview a senior manager about the outsourcing practices for the company. Identify activities that are outsourced and find out

the activities that are likely to be outsourced in the future.

Using the framework provided in this chapter, identify core and non-core activities for the firm and see whether practices followed by the firm matches with the insights derived from the chapter.