Business Process Outsourced by Telstra Corporation Limited - Case Study Example

Introduction Telstra Corporation Limited is Australia's main telecommunication as well as Media Corporation which creates and operates telecommunications system as well as markets voice, mobile, internet right of entry, pay TV and supplementary leisure products and services. The company has a long past in Australia, beginning together with Australia Post as a state subdivision, post master section. Telstra limited is currently wholly privatize individual and has been experiencing a transformation agenda to become more sales and marketing Outsourced service Business process outsourced by Telstra limited The company as partnered with Infosys technology to supply IT services on behalf of the company. Both companies signed a contract that see Infosys technologies supplying this IT services at a more affordable prices and thus will make Telstra limited to cut on daily operating expenses as well as improving on the reported net profit to the shareholders. Outsourcing IT service would lead to supply of product of highest quality that will consequently attract more clients to the company leading to enhanced reputation and increase in capital base for the company. Business process outsourcing 1. Infosys technologies Infosys Technologies has prevailed an outsourcing contract from Telstra limited an Australian Phone Company. The business had undertaken a seller merge practice to compress its IT service providers from EDS, IBM, Infosys and Satyam. The merger was aimed at dropping the spending on Information Technology systems. The above illustration depicts an unblemished arrangement of the business out sourcing processing. It is distinguished that Infosys’s technologies is going to provide IT service to Telstra limited a corporation incorporated in Australian at a cheaper value and consequently Infosys’s is authorized to provide goods and service that most excellent meets the company’s depiction and standards. Returns anticipated by Telstra limited out of BPO process The above graph depict that, the outcome of the business outsourcing process to Telstra limited is the enhancement of the reported net profit as well as reduction in operating expense since; the company will be able to use its available labor and space to manufacture other product at an affordable prices by maximizing the available labor and hour available consequential from product outsourcing while realizing profit from the outsourced product. In this regard, outsourcing of IT services from Infosys technologies is ideal to tetra limited since, the company general operating expense will be minimized and shareholders of the company will realize high returns inform of dividend paid to them from investment 3. About Infosys technologies Infosys technologies is an Indian worldwide corporation with its headquarter in bengaluru, karnatakan ,the company deals in supply of I T service ,outsourcing seervice, software engineering as well as business consultancy services. The company has entered into an agreement with Telstra limited a company incorporated in Australia to supply IT services at an affordable prices and product that meet customer’s expectation. Infosys Technologies has prevailed an outsourcing indenture valued at about $80-100 million from Australian Phone Company Telstra limited. The company had undertaken a retailer consolidation practice to condense its IT service providers from EDS, IBM, Infosys and Satyam. The consolidation was focused at reducing the expenditure of dealing with its IT systems. The above diagram depicts a flawless presentation of the business out sourcing processing. It is eminent that Infosys’s technologies is going to supply IT service to Telstra limited a company incorporated in Australian at a cheaper price and thus Infosys’s is mandated to supply goods and service that best meets the company’s description and standards. Infosys is thereafter going to be paid for service rendered in return, 4. The Advantages of Outsourcing IT services A. quickness and proficiency: Most of the times tasks are outsourced to dealers who concentrate in their field, the outsourced retailer in addition have precise equipment and technological know-how, most of the times improved than the ones at the outsourcing business. Efficiently the job can be finished quicker and with improved quality production. In this regard, outsourcing the IT service will lead to high returns in the business and thus customers will be attracted to unique product and of highest quality that meet their expectation thus leading to high report net profit to the company. B. focusing on core progression rather than the supporting ones: Outsourcing the supporting processes provide the business with extra time to make stronger their core business procedure, this would lead to maintenance of the company’s goals and mission as well as ensuring that their workers clearly understand the company’s objectives as well as what is expecting of the in ensuring that the desired end result is realized within the stipulated time frame. Focusing on process therefore ensures that the business survives in a challenging working environment and adverse business economic condition and hence, the business outsourcing process is a procedure that enable the business to survive in a challenging economic situation as well as guaranteeing on the going concern assumption of the company. In return, investor will be attracted into the business and hence the capital base of the company will be enhanced. C. Risk-sharing: One of the most vital factors concluding the result of a campaign is risk-analysis. Outsourcing specific constituents of the business process aids the business to transfer specific odd jobs to the outsourced seller because the outsourced retailer is an expert, they plan your risk-mitigating factors more improved. Telstra limited is in a position to mitigate risk on the product outsourced since, the company has a contracted a specialist in the relevant field to supplier the product. This in turn leads to reduction of risk to the business as well as guaranteeing business continuity despite hard economic times or harsh competition from its rival. D. Minimized Operational and Recruitment costs: Outsourcings avoid the necessities to employ individuals in-house; therefore staffing and operational costs can be reduced to a great amount. This is one of the prime advantages of offshore outsourcing. Reduction in operating expense and staffing cost would hence lead to high reported net profit to the company as well as wide investment capital available to the business. This will consequently guarantee business continuity and expansion and thus the shareholders will be contented with the usage of their capital as well as the administration of the company in ensuring that shareholders wealth maximization is the single objective of the company. The Disadvantages of Outsourcing A Risk of exposing confidential data: When Telstra limited outsources it services, it entails a risk of exposing private business information to a third party. In return the risk would lead to rivalry amongst the two companies making Telstra limited to have a drop in its product due to leakage of vital information to a third party. Reduction in a production line would thus make a company to report a reduction in reported net profit hence the investors and shareholders will lose trust in the company hence affecting its reputation that may doubt the business operation in the near future. In this regard, it is hard to ascertain the relevance of the outsourcing as well as considering the integrity of the third party in keeping the vital information of the company and consequently, it makes the business outsourcing process a difficult and challenging process. B. Synchronizing the deliverables: In case Telstra make a wrong choice in selecting the partner for outsourcing, some of the frequent predicament areas comprise of prolonged delivery time frames, poor product quality that do not meet customer and company’s expectation as well as unfortunate classification of responsibilities. At times it is easier to control these factors within a business to a certain extent than with an outsourced partner. Consequently this factors will lead to poor customer relation by the company due to sub-standard product as well as reduction in reported net profit and thus the business will have a negative reputation from the public leading to risk of insolvency and thereafter a takeover strategy from the rival company can be depicted. C. concealed costs: While outsourcing most of the times is cost-effective at times the concealed costs entailed in signing an agreement while signing an indenture across global boundaries might pretense a severe danger. In this regard, Telstra limited should clear perform a detail analysis of the product to outsource as well as conducting cost benefit analysis of the product to be outsourced in order to ascertain the relevance of the investment proposal. In this regard, the company will evading the hidden cost associated with product outsourced and consequently helping the company from facing financial default in the near future as a result of poor investment opportunity. Read More