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Advice You - Outsourcing: Guidelines For Success
Many business executives believe "offshoring" to be the destiny of any company that wants to remain competitive. Labor costs can be reduced by 25-30% or more, and companies across the country are doing it. How can responsible corporate officers not consider the offshoring option for their companies? But what are the real benefits and the pitfalls of offshoring? When does it make sense to pursue outsourcing, and how can you safely take advantage of low
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
er cost resources in other countries without risk or loss of quality?
Background:
Moving jobs to cheaper work forces is nothing new. Even as recently as a few decades ago, significant segments of the manufacturing sector were transferred to locations such as Mexico, where labor was cheaper. Although the transfer caused some social turmoil, it was regarded as a growing pain on the way to a more sophisticated economy. Workers were retrained in new skil
Background:
Moving jobs to cheaper work forces is nothing new. Even as recently as a few decades ago, significant segments of the manufacturing sector were transferred to locations such as Mexico, where labor was cheaper. Although the transfer caused some social turmoil, it was regarded as a growing pain on the way to a more sophisticated economy. Workers were retrained in new skil
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
s and assimilated into the "new" economy, based largely upon free trade and emerging technologies. It was reluctantly acknowledged that those jobs were gone forever, and that in the end both the workers and the economy would be better off.
A new variation on this familiar story occurred in the late 1990's. As the technology boom reached its peak, demand for skilled IT workers was far exceeding supply, driving labor costs to unsustainable levels and le
A new variation on this familiar story occurred in the late 1990's. As the technology boom reached its peak, demand for skilled IT workers was far exceeding supply, driving labor costs to unsustainable levels and le
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
aving companies without personnel for new projects. With the Y2K crisis putting additional pressure on technology, companies began to look to other locations to fill some of the excess demand for IT workers.
India and other countries had a wealth of highly skilled workers willing to work for dramatically less than was demanded by comparably skilled American workers.
With the Y2K crisis, the current wave of IT and other white collar job sector offshor
India and other countries had a wealth of highly skilled workers willing to work for dramatically less than was demanded by comparably skilled American workers.
With the Y2K crisis, the current wave of IT and other white collar job sector offshor
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
ng was initiated.
“The new telecommunications technologies are now making possible this pitting of domestic workforces against foreign workforces just as for centuries before domestic products have been pitted against foreign products.”
Current State:
It is estimated by Goldman Sachs that since 2000 U.S. companies have sent 400,000 service jobs overseas, and the Information Technology Association of America (ITAA) believes that during the same perio
“The new telecommunications technologies are now making possible this pitting of domestic workforces against foreign workforces just as for centuries before domestic products have been pitted against foreign products.”
Current State:
It is estimated by Goldman Sachs that since 2000 U.S. companies have sent 400,000 service jobs overseas, and the Information Technology Association of America (ITAA) believes that during the same perio
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
104,000 technology jobs have moved overseas. Everyone agrees that this number will grow dramatically over the next five years. Some have estimated that as many as one million jobs may be sent to India alone by the end of the year, and that a million jobs a year may be lost to overseas locations for the next several years. But who is offshoring, what kinds of jobs are being transferred, and how is it working?
Forty percent of the Fortune 1000 firm
Forty percent of the Fortune 1000 firm
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
s have begun to offshore, according to Forrester Research, Inc., though 25 to 30 percent of these are offshoring on a limited basis, for small projects, spending no more than 5 percent of their IT budgets on offshore work. Only 5 to 10 percent are using offshoring for complex projects and mission-critical operations. However, this is likely to change.
Sixty-four percent of finance executives polled recently responded that they planned to do more off
Sixty-four percent of finance executives polled recently responded that they planned to do more off
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
horing in the next two years. A great portion of recently offshored jobs paid $50,000 or more before being transferred overseas. Although much of the offshoring has been in the information technology area, call centers, finance functions, data entry, and human resource operations have also been outsourced.
Benefits:
There is no doubt that the primary benefit of offshoring is the cost savings. The ITAA estimates that outsourcing currently saves U.S.
Benefits:
There is no doubt that the primary benefit of offshoring is the cost savings. The ITAA estimates that outsourcing currently saves U.S.
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
ompanies about $7 billion and that by 2008 the number will climb to $20 billion. The savings from offshoring varies. In the same survey cited above, over forty percent surveyed said they were saving as much as twenty percent or more. Nearly the same number are saving from ten to twenty percent.
Hazards:
The savings do not tell the whole story, however. Offshoring does have hazards which companies considering the option must weigh.
· Finding Skilled
Hazards:
The savings do not tell the whole story, however. Offshoring does have hazards which companies considering the option must weigh.
· Finding Skilled
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
Labor: Before investing in a region, you must be sure there will continue to be an adequate supply of labor skilled in your areas of need. Look at the rates of graduation and the demand for the skills in the country.
· Geography Gap: Inherent in offshoring is the distance obstacle. Since work is being done in a different country, it is often more difficult to ensure that companies are getting what they are paying for until it is too late. Rework and q
· Geography Gap: Inherent in offshoring is the distance obstacle. Since work is being done in a different country, it is often more difficult to ensure that companies are getting what they are paying for until it is too late. Rework and q
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
ality control are problems.
Distances also mean travel and other communication costs.
· Cultural Gap: Cultural gaps may be a problem for some types of work, such as call centers and business analysis. For example, different cultures may have differing standards of customer service, and business analysis often requires a good understanding of American business practices. Cultural differences may be the source of some disconcerting surprises.
· Langua
Distances also mean travel and other communication costs.
· Cultural Gap: Cultural gaps may be a problem for some types of work, such as call centers and business analysis. For example, different cultures may have differing standards of customer service, and business analysis often requires a good understanding of American business practices. Cultural differences may be the source of some disconcerting surprises.
· Langua
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
e: It may be obvious, but language differences can be a major stumbling block to getting the work product and the working relationship you expect. Even different dialects and accents can cause problems in areas involving direct customer contact.
· Infrastructure: The country's telecommunications infrastructure may be inadequate for some types of IT work. Even poor roads and airports may cause major headaches.
· Security & Property Rights: Security an
· Infrastructure: The country's telecommunications infrastructure may be inadequate for some types of IT work. Even poor roads and airports may cause major headaches.
· Security & Property Rights: Security an
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
d the status of intellectual property rights are often major considerations for those organizations dealing with sensitive data.
· Movement of Money & People: Some countries impose burdensome restrictions on the movement of money out of the country. And obtaining visas in short order may be impossible for residents of some countries.
· Politics: Finally, the political stability of the country must be considered, and the laws of the location must be c
· Movement of Money & People: Some countries impose burdensome restrictions on the movement of money out of the country. And obtaining visas in short order may be impossible for residents of some countries.
· Politics: Finally, the political stability of the country must be considered, and the laws of the location must be c
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
refully examined to avoid unforeseen consequences.
“ By following some basic guidelines and having a clear plan of execution, offshoring may be the right strategy for your company.”
Tips For Success:
· Scope the work: Carefully define and scope the work to be offshored. Know what you want to accomplish and how much it should cost you.
· Offshore non-critical functions: Maintain the integrity of your core competencies by offshoring only non-critical
“ By following some basic guidelines and having a clear plan of execution, offshoring may be the right strategy for your company.”
Tips For Success:
· Scope the work: Carefully define and scope the work to be offshored. Know what you want to accomplish and how much it should cost you.
· Offshore non-critical functions: Maintain the integrity of your core competencies by offshoring only non-critical
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
functions. And start small. Just as you wouldn't jump in too deeply with a domestic company before gaining some history and confidence in the company, so should you be similarly cautious with offshoring partners.
· Know what to offshore: Software development, data entry, and transaction processing have been successful; customer service and voice interaction are more risky.
· Choose the right location: The type of work being outsourced will influence
· Know what to offshore: Software development, data entry, and transaction processing have been successful; customer service and voice interaction are more risky.
· Choose the right location: The type of work being outsourced will influence
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
the location. India has gained a reputation for software development. Between 2003 and 2004 it has seen over a 30% growth in software and IT service exports, and by the year ending in March, 2004, Indian companies have earned $12.5 billion in technology exports. But India is not the only source of reliable but inexpensive labor. Countries such as China, the Philippines, Romania, Argentina, and even Ghana and Ireland are all centers for offshore operat
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
ons of various kinds.
Matching an outsourcing effort with the appropriate labor force requires consideration of a whole host of factors.
· Measure performance: A plan for measuring performance and evaluating success must be in place. Companies must be able to measure the work. In order to measure the financial success of the offshore operation, current costs must be understood. Pay may be linked to performance benchmarks to safeguard against poor pe
Matching an outsourcing effort with the appropriate labor force requires consideration of a whole host of factors.
· Measure performance: A plan for measuring performance and evaluating success must be in place. Companies must be able to measure the work. In order to measure the financial success of the offshore operation, current costs must be understood. Pay may be linked to performance benchmarks to safeguard against poor pe
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
formance.
An overall savings of 20 to 30% is reasonable to expect as a bottom line measure of success.
· Monitor the work: Monitoring the work is critical if surprises are to be avoided. Personal interaction with the offshore site should be incorporated in some fashion. Placing one or more managers on-site is ideal, but at least some face-to-face contact should be planned. An on-site presence will also help to alleviate security concerns.
· Consult
An overall savings of 20 to 30% is reasonable to expect as a bottom line measure of success.
· Monitor the work: Monitoring the work is critical if surprises are to be avoided. Personal interaction with the offshore site should be incorporated in some fashion. Placing one or more managers on-site is ideal, but at least some face-to-face contact should be planned. An on-site presence will also help to alleviate security concerns.
· Consult
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
experts: Extra caution must be used when negotiating the deal. International specialists should be consulted and intellectual property rights retained.
· Exit strategy: An exit strategy should be place in case the operation does not work out.
Summary:
With large populations of educated workers in foreign lands willing to work for considerably less than similar workers in the U.S., the offshoring of strategic segments of work traditionally thought
· Exit strategy: An exit strategy should be place in case the operation does not work out.
Summary:
With large populations of educated workers in foreign lands willing to work for considerably less than similar workers in the U.S., the offshoring of strategic segments of work traditionally thought
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
f as white collar work has begun. And this shift of work and work forces will continue as long as these conditions exist. Companies with operations ripe for offshoring must consider this option if they are to remain competitive.
About Ralph Dandrea:
Ralph Dandrea is the President of ITX Corp., and leads its Business Performance practice. He is experienced in business and information technology management and holds graduate degrees in business and law
About Ralph Dandrea:
Ralph Dandrea is the President of ITX Corp., and leads its Business Performance practice. He is experienced in business and information technology management and holds graduate degrees in business and law
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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