CHAPTER I INTRODUCTION

INTRODUCTION TO THE STUDY: This study was primarily undertaken to thoroughly understand the readiness to the outsourcing of IT infrastructure in pharmaceutical sector within the Indian mid-market, which is believed to have immense untapped potential. It was therefore, vital to understand the mindset of the people in pharmaceutical businesses to identify the possible obstacles in the path of adoption of outsourcing. In the process, many significant IT adoption challenges faced by the pharmaceutical segment were noticed. It also highlights how internet-enabled technologies can help this sector in increasing efficiency and achieving faster growth.
1.1 THEORETICAL BACKGROUND:

Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Outsourcing is a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations.. The three categories of outsourcing with the lowest level of adoption are desktop support, data center operations, and help desk outsourcing. Even though these categories are the least popular, they still show a positive growth trend, with a greater number of organizations increasing their use of outsourcing than back-sourcing. Furthermore, the level of back-sourcing in these categories is low, indicating a relatively high level of satisfaction with this type of outsourcing. While there is several economic and business advantages to outsourcing IT infrastructure, three stand out. First, strategic outsourcing can deliver savings on capital expenses and a reduced total cost of ownership (TCO) for the organization. Instead of making heavy investments in a physical security infrastructure, like that of a fully-redundant data center, a firm can leverage an

outsourcing providers technology, capabilities and infrastructure for a best-of-breed solution that does not require burdensome capital investment. Additionally, a firm can leverage service level agreements (SLAs) to ensure IT infrastructure availability and performance sync with the firms business objectives. SLAs are not often provided internally if IT infrastructure is managed in-house. Another benefit is the ability to take advantage of technical expertise of the outsourcing provider when it comes to managing capabilities such as load balancing, security, storage systems, etc. The ability to benefit from this expertise is of tremendous value, particularly for firms with smaller data center facilities unable to accommodate the latest advancements in areas such as increased density and power utilization. There is a lot of scope and opportunity in outsourcing for pharmaceutical companies but its a great challenge to manage this relationship and generate value. There is a need of confidentiality of the proprietary knowledge amongst the companies to ensure a continuous growth in outsourcing. Outsourcing gives solution to various problems of pharmaceutical companies and allows them to take advantage of the potential of new drug development technologies. Its a dream which is certain to come true in future when pharmaceutical companies and their outsourced partners work together in a symbiotic relationship, wherein pharmaceutical companies focuses on their core competencies in marketing and commercialization and outsourced partners supply new innovative products. It is a crucial element in R&D process as many multinational companies looking for more cost effective measures and at the same time trying to add more products in their pipeline. Outsourcing has become an important strategic question in pharmaceutical companies. Opportunity for contract manufacturing is tremendous looking at the current market conditions. Pharmaceutical giant Pfizer recently announced drastic cost cutting measures. They intend to shut two of its manufacturing plant is US and planning to sell their third plant located in Germany. But the interesting fact is Pfizer is expecting to have an 30% increase in its sales, so with shutting three plants all over it is assumed that they will now go for contract manufacturing of its medicines.
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Just a short time back outsourcing in the pharmaceutical industry was pertained to manufacturing process, clinical trials and few steps more before the product delivery. With increasing competition and globalization there has been a rapid increase in demand for more sophisticated medicines and cheaper drugs. Multinational companies like Pfizer, Novartis are now outsourcing key technical aspects of medicines like new product drug discovery, drugs enhancements and bio-tech R&D. Some of the major drivers towards this outsourcing decision are To increase the focus on core competencies Take the benefit of range of services and functions available from outsourcing Increasing cost pressures due to competition Growth of SME biotechnological companies Transparency of costs offered by outsourcing companies Globalization of pharmaceutical industries

Outsourcing- the current revolution of pharmaceutical industry is being used more strategically as a part of companys overall business strategy. The U.S. market for outsourced IT service in pharmaceutical manufacturing is currently growing at an annual rate of 10%-12%. This is expected to grow further in future as there is an increase in services and products offered by smaller pharmaceutical companies. With more number of companies are entering the market there has been an increase in the number of services which entices companies more towards outsourcing Many have argued on circumstances and conditions under which a firm should have an internal IT service or an outsourced IT service. But it is very important for companies to be readily prepared if they want undertake outsourcing. There are numerous factors that companies need to consider, some of them are: Internally standardized processes Investment in ongoing management and relationships Provision of support and guidance Support local management infrastructure
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The time needed to build trust with the teams at all other global locations

Importantly the decision to outsource should not be taken lightly as there are significant considerations to be taken, like: payoffs associated with the ventures, risks associated while outsourcing manufacturing and front office services, transaction costs and capital investments needed.

1.2 STATEMENT OF THE PROBLEM:

Outsourcing is often viewed as involving the contracting out of a business function to an external provider. Almost any conceivable business practice can be outsourced for any number of stated reasons. The implications of outsourcing objectively and subjectively vary across time and space. IT infrastructure is emerging as an important element in the attaining of the business objectives and the growth of the business. Across domain IT infrastructure is an integral part of the organization process and growth. Balancing this IT infrastructure and the core business will be a difficult task for the companies. Global competitiveness is driving market growth across domains and as the business expands, the need to focus on core capabilities becomes increasingly critical. The companies may require the best resources to be devoted across your enterprise as they grow. Maintaining the IT infrastructure and the core business will be a burden for the organizations concentrating on the other business. With this outsourcing of IT infrastructure has gain a lot of importance. The companies can concentrate in their core business with the outsourcing of the IT infrastructure part. 1.3 NEED FOR THE STUDY Gives a better understanding of pharmaceutical companies concerns on the outsourcing of their IT infrastructure. And helps in building future strategies which are targeted at resolving those issues. An outlook on challenges faced by the In-House team of IT services in pharmaceutical companies provides information on key areas to focus efforts on. An outlook on benefits demanded by the pharmaceutical companies before the consider outsourcing to an external provider. Understanding the issues related to outsourcing in the pharmaceutical companies and help to improve service delivery.

CHAPTER II REVIEW OF LITERATURE

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Anudeep

Gupta

(2007)

in

his

study

on

OUTSOURCING

DECISIONS

IN

PHARMACEUTICAL INDUSTRY describes that companies should be open to outsourcing as it has the potential to create a value for them and its shareholders. Outcome of this form of strategic decision are far reaching given that number of positive and negative features can be attributed to this form of cooperation. As from the analysis he found that there were several convincing reasons for performing outsourcing but primary rationale was consistent with the belief of transaction cost economics i.e. to achieve economic improvement in the performance of business functions. His findings have challenged the concept of core and non-core activities as a basis for outsourcing decision in the companies. Core and non-core concept has widely dominated much of the literature and frequently used in practice. However the findings revealed that apart from core and non-core there are several other benefits offered by outsourcing and holds equal importance to the companies. This includes outsourcing of functions from a specialist supplier as an effort to reduce the costs and to benefit from the competitive knowledge and practices. Transaction cost economics and resource based view both complements each other as a recommendation for outsourcing decision and management. Findings also revealed the presence of political influences on outsourcing. Organizational politics involves the strategies that individuals employ in order to obtain and use power to influence organizational goals in order to further their own interest and ambitions (McIvor, 2005) He finds with regards to outsourcing decision the firms are looking forward to leverage their existing resources to gain superior gains and efficiencies in R&D. Cost appears to be a little concern when firms are looking for excellence in drug discovery and delivery. Given the condition of rising costs of innovation it can be argued that future of pharmaceutical outsourcing will continue to depend on these external agents considering the benefits offered by them. However a major concern today is the growing dependence on the external supplier which is perceived as a major drawback to outsourcing. It was noted that with outsourcing pharmaceutical companies gets an important learning curve in regards to managing its resources more efficiently. Although history suggest that there are significant gains made through this tool but there are still number of issues that need to be considered if this process is to be more rewarding.
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Finally he concluded there is little evidence to suggest that companies have a clear understanding or a strategy for the conduct of outsourcing. In the end, outsourcing has still not proved its potential that many researchers have thought to be. It can however provide monetary and tangible benefits to those who implement it properly. McIvor (2008) in his research work has given a due focus on concepts of RBV and TCE in outsourcing decision making. He mentions that many of these approaches were mainly concerned with application of quantitative methods to evaluate outsourcing decision. However transaction cost economics have been extremely significant in outsourcing frameworks proposed in literature (Vining and Globerman, 1999; Ngwenyama and Bryson, 1999). Theories influenced by transaction costs argue that a successful outsourcing decision can be selected on the basis of transaction cost minimization. Vining and Globermans (1999) framework focuses on how an organization assesses ex ante the potential transaction costs that arise in outsourcing and how and in what circumstances transaction costs can be reduced (McIvor, 2008). His work gave a due emphasis on how can outsource decisions be taken on the basis of transaction costs. He focused on key issues like product complexity, asset specificity, uncertainty while considering an outsourcing decision. Transaction cost theory has addressed wide range of decision related problems like contracting, make v/s buy decisions and assessing the boundaries of the firms (Walker and Weber, 1984; Williamson, 1976). Williamson (1975) in the topic transaction cost economics (TCE), has given a deep understanding in the reasons for the existence of the firms and determination of the boundaries of the firm. Williamson in his paper mentions that there are two types of costs that are bearded by the firm firstly being production costs and secondly transaction costs. Production costs are the costs which are incurred during building and running of a machine. Transaction costs are incurred at the time of making of the contract due to asymmetries of information, bounded rationalities and opportunism. Such cost arises from the activities like evaluating the suppliers, negotiation, control function, etc. Transaction costs exist not only in the market but also in the hierarchies. The basic idea here is to find a governance structure with the lowest costs for each transaction (Arnold, 2001). Hence there is a need to have a deep understanding of characteristics of transactions. Williamson argues that firms want to minimize their total costs which comprises of both transaction costs as well as production costs. In some situations transaction cost will be lower if the particular transaction is taking place in an
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open market which in other conditions will be lower if integrated vertically (Williamson, 1975).Williamsons in his paper has specified that transaction costs can be judged on the basis of three variables, Frequency, Uncertainty and Asset Specificity. Transactions can be frequent or rare, certain or uncertain or involve specific or non-specific assets, whatever their nature is, these three variables will decide whether the transaction costs are lower in the market or in the hierarchy (Williamson, 1975).

Xiaoding wei (2007) on the topic INTERNATIONAL OUTSOURCING IN THE SWEDISH COMPANIES has said that the important motives for the decision in all options are the same, they are reducing cost, accessing to core competence, using suppliers' resources, focusing on innovation, reducing capital, regain control of inside companies, transfer fixed cost into available cost, and so on. In his articles, there are also many parts discussing the effects of those four options. Some of them believe that the benefits of outsourcing options are a lot, such as reducing cost, accessing core competence, quality improvement, productivity improvement. However, many authors think the outsourcing options have a lot of shortages as well. If companies begin to use an outside supplier or off-shoring, they will lose their independence, rely on supplier. And it could hinder innovation result by losing core competences and decreasing quality. Even the cost is not as low as the companies suppose. In the survey analysis done by him contains a lot of information of the Swedish companies' choices of four options and performances of their business. The statistics results shows us that cost, fixed cost and investment reducing are important motives for all four options. Especially, the off-shoring has an accessing core competence motive. Others motives which highlighted are not as important. Some of them, like TTM, in data analysis, are almost equals to 1(1 means least important). In house production option has all positive effect results. In outsourcing and off shoring options, only have time and lead time negative effects. International outsourcing option has one more positive effect, it is quality. In Scheffes results, in-house production and international outsourcing options have significant different in delivery time and lead time effects. It means the time effects are difference between those two options. In characteristic group, the results also show that production characteristics are easy to produce and standard products.
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In the motives groups, most important motives of option decisions are costs reduce, fix costs and investment reducing. Off-shoring option has one more important motive, accessing core competence. He realize that motives of focusing on innovation, lower NPD, reducing capital need, reducing TTM and Manufactory control are not important motives in Swedish companies. In the effects group, effects of in house option are the best. In house production option has no negative effect. Other options have both lead-time and delivery time negative effects. International outsourcing option has one more negative effect, it is Quality. Outsourcing may hinder innovation and rely on supplier, however, in empirical study, all those effects are positive. In production characteristics group, Swedish companies only outsourced standard and easy products. So this is one reason why hinder innovation and rely on supplier are positive effects.

Domenico Blyth (2008) in his study on INFORMATION TECHNOLOGY OUTSOURCING AND ITS RISKS gives significant information regarding the prevailing perceptions ITO(Information Technology Outsourcing) clients have in regard to the ITO risks of supplier lock-in, hidden costs and the loss of control over outsourced IT. Within the theoretical background, the evolution of ITO and some of the most frequent ITO theories were presented. Moreover, in order to appropriately present in which kind of ITO operations the risks under discussion are most likely to appear, a multidimensional approach was chosen to present the various dimensions of ITO. Furthermore, reasons for and risks of ITO were presented according to their strategic, economic, technological or political nature. Thereupon, the risks selected for further examination were presented and discussed according to transaction cost theory or resource-based theory. Additionally, the dimensions of ITO which are characteristic for the risks under discussion were identified. Since the aim of this thesis was the exposure of relevant information on the prevailing perceptions ITO clients have in regard to supplier lock-in, hidden costs and the loss of control over outsourced IT, primary data was collected. This primary data collection aimed at the revelation of significant information. The very information was obtained by conducting telephone interviews with both ITO clients and IT suppliers and by analyzing these interviews in an extensive way. Furthermore, this work aimed at examining reasonable measures to take with regard to the risks under consideration. These measures were presented
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according to the respective ITO risk they belong to and the effects these measures have were explained. Additionally, the measures were subdivided into internal and external measures, so that an overview of the presented measures was facilitated. Finally, the influence of the risks under consideration on potential back sourcing considerations was examined. After all, it became apparent that all risks under consideration play decisive roles in regard to back sourcing considerations. Certainly, small companies with limited financial resources are in less advantageous situations than companies which are financially strong, but still even small companies should not take the risks entailed by total outsourcing. Instead of taking these risks companies should consider selective outsourcing. That is to say, an adequate amount of IT at least core tasks such as first level support and reasonable ITO management should be guaranteed internally. By this means, future back sourcing operations is facilitated considerably. Furthermore, it became apparent that the transition of material assets and the documentation of provided IT do not represent major problems in regard to back sourcing decisions. It seems as if especially companies which source out sensitive data and/or are highly dependent on external IT provision should consider to bring parts of the outsourced IT back inhouse. Companies of rather big dimensions are likely to have complex structures with interconnected business processes which lead to a dilemma. On the one hand, projects which require deeper insights into the specific, complex structure of organizations are most likely to be performed better and more cost-efficient when they are confided to internal IT providers. On the other hand, organizational growth seems to result in an increase of the complexity of IT tasks which need to be fulfilled. As a result, this increasing complexity leads to an increasing necessity to work with specialized, external IT suppliers. Since each case of ITO is characterized by different peculiarities, back sourcing decisions can most likely not be made based on the analysis of a few factors, but need to be scrutinized with regard to the peculiarities of the respective organization under consideration. However, the points mentioned above certainly represent an auxiliary starting point for discussions on back sourcing considerations. Without doubt, ITO companies should primarily aim at guaranteeing their capability of acting without being significantly dependent on external IT provision. By this means, companies which conserve their independency are solely responsible for the efficient utilization of IT. As a result, the influence IT has on the organizational success will primarily originate from internal

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achievements and is not highly dependent on external partners. Therefore, ITO companies should scrutinize whether it is reasonable to bring parts of their outsourced IT back in-house or not.

Angela Mui (2003) in the study INVESTIGATION OF IT/IS OUTSOURCING IN SINGAPORE tells about the concept of outsourcing information technology (IT) or systems (IS) has been around since mid 1960s. Today, outsourcing has become a potentially viable business solution that many IT managers are looking into in order to remain competitive in the current dynamic business and technological environment. In Singapore, the recent IT outsourcing by DBS Bank has raised the awareness and sparked off the interest to conduct this study. The purpose of this thesis is therefore to investigate this latest IT trend and to look into the concepts and practice of outsourcing in Singapore. An intensive literature review and an empirical survey based on questionnaire technique were conducted to learn about outsourcing concepts and practices. In the literature review, the concepts of outsourcing were explored. The different types of outsourcing practices and trends, categories of outsourcing services, drivers, benefits, risks, challenges and critical success factors of outsourcing based on the lessons learnt from past outsourcing experiences were discussed while the survey assessed the IT/IS outsourcing trend in Singapore. The survey revealed that outsourcing has been a positive experience. Generally, there are differences in views between people of different roles and there is a gap in the understanding and practice of IT/IS outsourcing in Singapore in comparison to the literature.It is learnt in this study that outsourcing is not a perfect and workable solution for everyone. Organizations should always stand back and examine the outsourcing option. The bottom line is outsourcing should always be backed by an objective business case. It should be not a decision that blindly follows the market trend. Organizations should not simply jump into the outsourcing bandwagon without fully comprehending the outsourcing concept. Thorough evaluation of the feasibility of such business venture is necessary.

S. Chinbat (2010) said in his study that increasing globalization has strongly urged software organizations to lower software development costs and access to best skilled resources, which lead using of global software development team as one of many possible solutions. More
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and more software companies have become multinational and used benefits of offshore insourcing, outsourcing and virtual software development team in order to increase their competiveness and keep their software development cost down. However, substantial number of them fails to achieve their expected high result due to many inherent drawbacks of virtual software development and software companies have limited time and budget for researching these problems and ways to successfully solve them. The paper investigates major factors that enable global software development teams work successfully. Lately, many researches have been done on understanding success factors of global software development. Sourabh Kankhar (2005) in his article RIGHT PRESCRIPTION FOR THE GROWTH OF PHARMACEUTICAL COMPANIES tells about the major stages of the pharmaceutical value chain comprise drug discovery, drug development, manufacturing, distribution, and sales and marketing. Improving efficiency for a speedy ROI in every stage has become a critical factor to ensure the success of the company. Strategic adoption of Information Technology (IT) is also essential to speed up the process of research, development and sales of drugs. The pharmaceutical companies in Asia are slowly starting to adopt IT solutions in their value chain. At present, majority of them are focusing on automating the manufacturing, distribution and sales and marketing process. There is a major demand for solutions such as ERP, SCM, CRM and sales force automation. In future, as IT component becomes critical for pharmaceutical research, a major market for drug discovery-related IT solutions is foreseen. Demand for enterprise-wide solutions such as data mining, knowledge management and business intelligence will be on a rise when companies realise the need to integrate and analyse data for informed decision making.

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Figure 2.1 IT adoption level in pharmaceutical companies IT adoption in a pharmaceutical company can be characterized by four different levels. The level 1 company has only department- specific solutions, which automate a single department and are not integrated. The implementation of IT solutions in level 2 companies is pretty integrated into multiple functional areas. An ERP solution which integrates the companys financial, manufacturing, sales and human resources department is a typical example of level 2 companies. Solutions such as business intelligence, data warehousing, data mining along with the enterprise-wide solutions for instance SCM, form the IT set up of the level 3 companies. These solutions assist the company to make informed decisions after extensive data analysis. The level 4 companies are totally automated with the help of solutions such as enterprise application integration.

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Figure 2.2 Asian pharmaceutical IT market demand and potential

According to him the major drivers for the Asian pharmaceutical IT market are The booming pharmaceutical market in Asia, Growing competition between multinational and local pharmaceutical companies in this market, Growing awareness of the advantages of IT adoption by the pharmaceutical companies in Asia ,Growth in the number of clinical trials as an increasing number of pharmaceutical companies in Asia have started focusing on R&D initiatives. Information technology is seen to be a very important factor for the success of the pharmaceutical market in Asia. Many pharmaceutical companies are expected to use IT to completely transform their business. The IT spending of companies will reflect their strategies to introduce new drugs, enter new markets, and be more competitive in the challenging Asian pharmaceutical market

CHAPTER III
14

INDUSTRIAL AND COMPANY PROFILE

3.1 INDUSTRY PROFILE India's outsourcing industry is estimated to be worth about $52 billion. India continues to dominate global outsourcing market. Banking and financial services contribute nearly 40 percent to India's outsourcing industry.India is the leading country for offshore outsourcing. The offshore outsourcing industry started in India and it has be able to grow the IT and BPO export sector to $47 billion and capture more than half the offshore outsourcing industry. That is not to say that India does not have challenges or is the best location for every offshore outsourcing effort, but it has an unparalleled history and size. The Americas and Europe are the largest customers for the Indian outsourcing industry and account for 60% and 31% respectively of IT and BPO exports. The largest vertical sectors are financial services (41%), high-tech/ telecom (20%), manufacturing (17%) and retail (8%). In 2009 the IT and BPO export industries employed about 2.2 million people. IT and BPO services outsourcing first started in India in the mid 1980s. The large, English speaking, low-cost workforce was the main attraction. The industry grew rapidly through the 1990s aided by the dot com boom and IT upgrades to prepare for potential Y2K bugs. The 2000s saw similar growth with work moving to India in down cycles to help companies cut costs and in boom times to capitalize on the readily available talent. As on 31 March 2002, 42 IT outsourcing companies in India achieved SEI-CMM Level 5 assessments. 316 Indian outsourcing companies have achieved quality certifications. More and more IT outsourcing firms are striving for it. Moreover, the Indian software industry has accepted and adopted newly emerging People Capability Maturity Model (People-CMM). As per 27 June 2002 statistics, India has 85 companies at SEI-CMM Levels assessment for this. These statistics indicate the fact that almost all the companies in the Indian IT sector have realized the value of quality and its accepted standards and that they are vigilant towards achieving it. It will be interesting to take a look at the Global Accreditation, which the Indian IT players have won

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The 2008-2009 global recession has had a negative impact on outsourcing growth in India, but the sector is experiencing a turn-around in 2010. Many US and European companies are still cautions about the speed or staying power of the 2010 economic recovery and thus are looking to maintain a low cost base in locations such as India. We expect IT and BPO outsourcing in India to bounce back to double digit growth rates in 2010. The Indian information technology (IT) industry has played a key role in putting India on the global map. Over the past decade, the Indian IT-BPO sector has become the countrys premier growth engine, crossing significant milestones in terms of revenue growth, employment generation and value creation, in addition to becoming the global brand ambassador for India.Software and BPO industry in India has provided a major boost to the country's economy. It provides employment to millions of Indians. In 2002 Spectramind was bought by software major Wipro, and BPO by then had become mainstream like the IT Industry in India. The team that had set up Spectramind went on to start Quatrro in 2006, a BPO specialising in high end BPO/KPO services. By 2002 all major Indian software organizations were into BPO, including Infosys (Progeon), Inforlinx, HCL, Satyam (Nipuna) and Patni. By 2003 Daksh was bought out by IBM, and later in 2006 MphasiS was acquired by EDS. Even international 3rd party BPO players like Convergys and Sitel had set up shop in India, swelling the BPO movement to India. Then service arms of organizations like Accenture, IBM, Hewlett Packard, Dell also set up shop in India. BPO industry in India is worth $11 billion. During 2007-08, Indian information technology industry experienced a slowdown and revenue growth rate has been brought down to 21 percent from previous year figure of 41 percent. But it's still predicted that Indian BPO and IT industry will grow to become a $132 billion entity by 2012.The frenetic pace, with which Indian players are moving towards achieving internationally recognized quality control standards, largely arises out of the awareness that the BPO industries cannot sustain themselves on the advantages of lower costs and English speaking abilities alone. The importance of consistency, low error rates and customer satisfaction has never been felt as strongly as right now. Naturally, governing bodies like NASSCOM are holding no bars in its efforts to improve quality regulation. By the end of 2004, it plans to introduce a common certification program across India for aspiring candidates, in terms of the skills and knowledge required by the BPO industry.
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Another significant move towards ensuring quality is NASSCOM's initiative towards controlling issues like copyright infringement. It plans to formulate a comprehensive draft proposal to ensure information security and data privacy. The proposal will also emphasize the need for internal checks and continuous quality reviews, both by the internal senior management team as well as by the client team. NASSCOM also plans to create a common yardstick for BPO organizations. Attempts to create such a yardstick are being made by Carnegie Mellon University which is involved in developing E-SCM or the E-Services Capability Model. This model is extremely useful for customers who are selecting a suitable service provider, as it allows them to compare the capabilities of different service providers, and also compare issues associated with the initiation and completion of the project. The concept of benchmarking is also beginning to be used more regularly. Benchmarking is a continuous process of assessing and comparing an organization's performance with a recognized industry leader. This is especially useful in knowing where a particular company stands in relation to its competitors. It also makes it easier to identify which areas need more attention in terms of quality control. The Quality Assurance Institute holds various training programs in Six Sigma, COPC Implementation and Support and non-certified skills like maintaining customer satisfaction, people management, service levels and transaction monitoring. Outsourcing to India offers significant improvements in quality and productivity for overseas companies on crucial parameters such as number of correct transactions, number of total transactions, total satisfaction factor, number of transactions/hours and the average speed of answers. Surveys by NASSCOM also revealed that Indian companies are better focused on maintaining quality and performance standards. Indian ITES/BPO companies are on an ascending curve as far as the quality standards are concerned. Organizations that have achieved ISO 9000 certification are migrating to the ISO 9000:2000 standards and companies on the CMM framework are realigning themselves to the CMMI model. Apart from investing in upgrading their CRM and ERP initiatives, many Indian ITES companies are beginning to

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acknowledge the COPC certifications for quality and are working towards achieving COPC licenses. IT services is expected to grow by 2.4 per cent in 2010, and 4.2 per cent in 2011 as companies coming out of recession harness the need for information technology to create competitive advantage .NASSCOM said that the domestic IT-BPO is expected to grow by 15-17 per cent during FY11. According to NASSCOM, the industry will witness a healthy growth in 2010, led by growth in the core markets and supplemented by significant contributions from emerging markets. Growth drivers include a thrust on platform BPO, Analytics, Finance & Accounting, Remote Infrastructure Management, ADM, and Cloud Services. The annual survey on the outlook for FY10-11 said that the growth in the domestic IT-BPO spend is driven by a robust economy, increased IT spending by government and adoption of IT by SMBs. The data centre services market in the country is forecast to grow at a compound annual growth rate (CAGR) of 22.7 per cent between 2009 and 2011, to touch close to US$ 2.2 billion by the end of 2011, according to research firm IDC India's report published in March 2010. The IDC India report stated that the overall India data centre services market in 2009 was at US$ 1.39 billion. China has proved to be a major threat for Indian outsourcing industry. Chinese cities like Beijing, Shanghai, Shenzen, and Dalian are regarded as top destinations for outsourcing business to. Chinese outsourcing industry is worth about $15.2 billion. Philippines and Malaysia have also taken to outsourcing in a big way. Philippines have a pool of quality talent that can compete and even excel in rivalry against Indian outsourcing professionals. India offers a cost advantage that is not easy to beat. But, rising wage bill of IT professionals and global financial meltdown is challenging India's position as a preferred destination for outsourcing business processes.

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3.2 COMPANY PROFILE Wipro (an acronym of "Western India Palm Refined Oils") started as a vegetable oil trading company in 1947 from an old mill at Amalner, Maharashtra, India founded by Azim Premji's father. When his father died in 1966, Azim, a graduate in Electrical Engineering from Stanford University, took on the leadership of the company at the age 21. He repositioned it and transformed Wipro (Western India Palm Refined Oil Ltd) into a consumer goods company that produced hydrogenated cooking oils/fat company, laundry soap, wax and tin containers and later set up Wipro Fluid Power to manufacture hydraulic and pneumatic cylinders in 1975. At that time, it was valued at $2 million In 1977, when IBM was asked to leave India, Wipro entered the information technology sector. In 1979, Wipro began developing its own computers, and in 1981 started selling the finished product. This was the first in a string of products that would make Wipro one of India's first computer makers. Wipro Technologies hired managers who held their employees to strict performance standards. In 1980 Wipro moved into software development and started developing customized software packages for their hardware customers. This expanded their IT business and subsequently developed the first Indian 8086 chip. Since 1992 Wipro has begun to grow its roots offshore in United States and by 2000 Wipro Ltd ADRs were listed on the New York Stock Exchange site. The company's revenue grew by 450 percent from 2002 to 2007. Wipro started a highly appreciated initiative called WASE - Wipro Academy of Software Excellence in 1996 .Under this program, some of the brightest science graduates are selected and enrolled in an MS (Software Engineering) program in collaboration with BITS,Pilani.

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Timeline 1945 - Incorporation as Western India Palm Refined Oil Limited 1947 - Establishment of an oil mill at Amalner, Maharashtra, India 1960 - Manufacture of laundry soap 787 at Amalner 1970 - Manufacture of Bakery Shortening Vanaspati at Amalner 1975 - Diversification into engineering and manufacture of hydraulic cylinders as WINTROL (now called Wipro Fluid Power) division in Bangalore. 1977 - Name of the Company changed to Wipro Products Limited 1980 - Diversification into Information Technology. 1988 - Crossed the $10 million mark in annualized revenues. 1990 - Incorporation of Wipro-GE medical systems 1992 - Going global with global IT services division 1993 - Business innovation award for offshore development 1995 - Wipro gets ISO 9001 quality certification 1996 - Crossed the $100 million mark in annualized revenues. 1997 - Wipro gets SEI CMM level 3 certification, enterprise wide processes Start of the Six Sigma initiative, defects prevention practices initiated at project level. 1998 - Wipro first software services company in the world to get SEI CMM level 5 1999 - Wipro's market capitalization is the highest in India 2000 - Start of the Six Sigma initiative, defects prevention practices initiated at project level. Wipro listed on New York Stock Exchange.

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2001 - First Indian company to achieve the "TL9000 certification" for industry specific quality Standards. -Wipro acquires American Management Systems global energy practice - Becomes world's first PCMM Level 5 Company. -Wipro becomes only Indian company featured in Business Weeks 100 best-performing technology companies. 2002 - Wipro acquires Spectramind. -Ranked the 7th software services company in the world by BusinessWeek 2003 - Wipro acquires Nervewire. -Wipro Technologies Wins Prestigious IEEE Award for Software Process Excellence -Wipro Technologies awarded prestigious ITSMA award for services marketing excellence -Wipro wins the 2003 Asian Most Admired Knowledge Enterprise Award. 2004 - Crossed the $1 Billion mark in annualized revenues. -Wipro launches Indias first RFID enabled apparel store. -Wipro Technologies named Asian Most Admired Knowledge -IDC rates Wipro as the leader among worldwide offshore service providers 2005 - Wipro acquires mPower to enter payments space and also acquires European System on Chip (SoC) design firm NewLogic 2006 - Wipro acquires Enabler to enter Niche Retail market 2007 - Wipro acquires US's Infocrossing for 600mn 2009 - Wipro acquires Gallagher Financial Systems to enter mortgage loan origination space.

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WIPROs Vision

Wipro's Vision is focused on attaining leadership in the areas of business, customer and people. Business Leadership: Among the top 10 Information Technology Services companies globally and the No.1 Information Technology company in India. Customer Leadership: The No.1 choice of customers through innovative solutions and Six Sigma processes. People Leadership: Among the top 10 most preferred employers globally by creating an environment of empowerment, intellectual challenge and wealth sharing. Brand Leadership: Wipro to be among the 5 most admired brand in India.

Quality Policy of Wipro

Most mature Six Sigma program in the industry - Ensures that 91 percent of its projects are completed on schedule, much above the industry average of 55 percent

World's first company to be awarded PCMM Level 5 and CMMi Level 5 World's first SEI CMM ver. 1.1 Level 5 software services company Defect prevention - Post release defect rates at less than 0.2 per KLOC, amongst the lowest in the industry

Cycle time reduction due to lower rework rate Cost of failure avoidance and high project visibility

Spirit of Wipro Intensity to win: Make customers successful. Team, Innovate, Excel. Act with sensitivity: Respect for the individual. Thoughtful and responsible. Unyielding integrity: Delivering on commitments. Honesty and fairness in action

22

Wipro Group Companies: Wipro Consumer Care & Lighting Wipro Consumer Care and Lighting (WCCLG), a business unit of Wipro Limited, started with vegetable oil production in 1947 and has since come a long way and established a profitable presence in the branded retail market. With a vast plethora of products spanning soaps, baby care products, health and wellness, Wipro's products have touched the lives of millions of consumers across India and global markets. It is also a leader in institutional lighting in specified segments like software, pharma and retail. Wipro Consumer Care and Lighting has been one of the fastest growing FMCG companies, both organically and through acquisitions.
Wipro Eco Energy:

Wipro Eco Energy, the renewable energy services arm of Wipro, is a one-stop shop
for all the renewable and alternative needs of your organization. Our scope of work provides the entire range of sustainable and energy efficient solutions such as,

Customized clean-energy solutions for institutional clients Energy Efficiency (reduce) and Renewable Energy (replace) Consulting, implementation and managed services They work on the industrial scale; our technologies are proven, have direct customer relevance, and are commercially viable. They are technology agnostic because we work on best technologies and recommend the same based on your unique environment. Wipro Eco Energy provides clean and sustainable energy solutions for all kinds of spaces, from factories to institutions and from offices to homes. Wipro Infrastructure Engineering Wipro Infrastructure Engineering, a division of Wipro Limited, delivers precision-engineered, world-class hydraulic cylinders, components and solutions, and truck hydraulic components to
23

OEMs globally in the infrastructure and related industries. It represents the Kayaba, Kawasaki, Sun Hydraulics and Teijin Seiki range of hydraulic products in India.

With state-of-the-art manufacturing facilities and extensive product development and testing facilities, Wipro Infrastructure Engineering has emerged as a leader in the hydraulic cylinders and truck tipping systems market in India.Wipro has recently entered water treatment business and provides ultra-pure water treatment systems and solutions for various industries.
Wipro GE Medical Systems Limited:

Wipro GE Medical Systems Limited is focused on delivering advanced solutions for significant challenges faced by healthcare organizations today. Wipro GE Healthcare, a joint venture between Wipro and GE, is part of GE Healthcare South Asia and caters to customer and patient needs with a commitment to uncompromising quality.They successfully manage a continuum of clinical information across the entire enterprise and our highly energized team provides superior customer and patient satisfaction, maximizing customer productivity with Six Sigma quality and uncompromising integrity.
Wipro IT:

In today's world, where IT infrastructure plays a key role in determining the success of business organization, Wipro Technologies and Wipro Infotech helps derive maximum value from IT investments. Wipro offers clients the full array of IT lifecycle services, from technology optimization to mitigating risks, there is a constant demand to evaluate, deploy and manage flexible, responsive and economical solutions. Outsourcing non-core operations can help you transform your business into a leaner and smarter organization with greater adaptability to changing economic and business trends. Wipro Infotech: Wipro Infotech footprint extends to India and Middle East Wipro Infotech has 13 regional offices in India besides offices in the UAE, Bahrain, Egypt and KSA to ensure that clients can reach Wipro Infotech anytime to discuss technology and business requirements.In India, Wipro
24

Infotech adds value to organisation through consulting services, business solutions, and professional services and as a total outsourcing partner. Wipro Infotechs product line for this region extends to products - desktops, notebooks, servers for the B2B segment, enterprise products and other software products and licences. With 13 regional offices across the country, they are at hand to ensure a smooth ride past all technology requirements and crises. In India and Middle East region Wipro Infotech service line extends to providing clients consulting and software solutions and services, along with our integrated total outsourcing solutions. These offices are staffed by dedicated business development and delivery teams besides onsite and off-site consultants with extensive regional experience. Wipro Infotech sets up, manages and supports your entire IT infrastructure covering your hardware, telecom, database management and system support operations. As a product agnostic company, Wipro Infotech have the skills and experience to work on best of breed technologies ensuring that your IT resources are always available and running. Wipro Infotech manages your infrastructure on an SLA basis and Wipro Infotech has the ready resources to plan and implement the entire IT setup for your organisation or a part of it. Through our Global Service Management Centre (GSMCTM) Wipro Infotech deliver remote services including remote monitoring and management of entire networks, systems and desktops. Wipro Infotech delivers the following infrastructure services: Infrastructure optimisation Infrastructure setup and provisioning on a pay-by-use basis Infrastructure management Enterprise application services

Across verticals, Wipro Infotech manages and support the legacy applications and address the requirements of developing and maintaining new applications. Wipro Infotech have the experience and technology expertise to manage large and complex enterprise application requirements covering functions such as ERP, CRM, SCM, HR management, e-commerce etc.
25

Wipro Infotechs enterprise application services deliver scalable, secure and full-featured solutions that integrate critical functions of the organisation while functioning across geographies. The key services include:

New application development and management Business applications sustenance Application optimization Program Governance

The complexity of managing total outsourcing projects is compounded by the extensive IT infrastructure and resources that need to be covered. Coordinating between the vast technical and operational aspects of the project requires a strong control model that overarches the given project while driving an actively managed partnership. Wipro Infotech, have created a program governance framework that helps support business objectives on strategic, functional and operational levels. This addresses the rules, processes, metrics and organizational structures needed for effective planning, decision-making, steering and control of the outsourcing engagement in order to mitigate the risk inherent in any outsourcing relationship. Wipro Infotech Total Outsourcing (TOS) services are targeted at achieving maximum value by providing end-to-end best of breed IT practices for your business. From technology optimisation to mitigating risks, Wipro Infotech fulfils your constant IT infrastructure and application demands while evaluating, deploying and managing flexible, responsive and economical solutions. Through our acknowledged quality processes and program governance frameworks, we help you achieve and sustain business momentum. Based on service level agreements (SLAs), we meet every need and objective of your business by providing IT infrastructure solutions that seamlessly align with organizational processes and practices. Wipro Infotechs Total Outsourcing services are delivered through a Program Management Office (PMO) which manages and governs all our projects. Through the PMO Wipro Infotech assure you that our clearly articulated vision strictly adheres to high standards of service delivery and quality. Wipro Infotechs program governance processes include:
26

 Service delivery management: Transition management, service management, change management, risk management, project management, performance review Technology management: Technology assessment, impact analysis, business case, deployment strategy, sustenance strategy Relationship management: Governance effectiveness, customer satisfaction,

communication, expansion of scope, issue management Contract management: Invoicing and verification, service consumption analysis, contract management, contract change management Wipro Infotechs Total Outsourcing services create value through technology to help transform your IT universe into a powerful business driver. The substantial benefits derived through our service include: Strategic: Wipro Infotechs continuing focus on business excellence helps you focus on your market objectives. Wipro Infotech provides effective decision support systems with industry benchmarking and are accountable for the work Wipro Infotech deliver at every stage of our partnership with you. Operational: Wipro Infotechs process delivery and best practices are backed by strong quality standards including ITIL, PMI, CMMi, ISO 9001:2000 and Six Sigma. The operational benefits are improved efficiency for your IT infrastructure with access to advanced technologies. Wipro Infotechs technology experts ensure process and quality led service delivery. Financial: You gain significant cost savings in overall IT operations through predictable expense management and a faster time-to-market ensures a quick return-on-investment (ROI) for your business. The strong frameworks that guide the outsourcing engagement to deliver business performance are complemented by Wipro Infotechs deep domain and industry vertical expertise. The unique demands and nuances of specific industry micro verticals need a clear focus and in-depth understanding to create true business value in an end-to-end outsourcing engagement. At Wipro
27

Infotech, recognizes this and have therefore developed domain competencies in banking and finance, manufacturing, energy, airlines, retail, utilities, government, telecom, healthcare etc. to help keep pace with changing demands of your industry. Through this vertical focus Wipro Infotech also ensure that your organisation is leading and not merely following when it comes to deployment of technology and industry standards. As one of the world's top technology vendor, Wipro Infotech has helped organizations strategies, integrate, manage, maintain and sustain their IT infrastructure to emerge stronger in their respective domains. They are the partner of choice for corporate as they outsource their IT requirements, thus enabling them to focus on their core competencies. Our success lies in our continued focus to help you enhance your business value through IT. Wipro Infotech is committed to deliver quality to your enterprise through our onsite, near site, multi-site, offsite and Global Service Management Centre (GSMCTM) service delivery models. Our end-to-end offerings in Total Outsourcing include: Competitors 1. WNS Group 2. Daksh e-Services 3. Convergys 4. HCL Technologies 5. Zenta 6. ICICI Onesource 7. MphasiS 8. EXL 9. GTL Ltd. 10. HTMT 11. 24/7 Customer
28

12. Sutherland Technologies

3.3 PRODUCT PROFILE

BUSINESS TECHNOLOGY SERVICE

Business Technology Services helps customers realize high business value by incorporating information strategy, business collaboration, business integration and managing IT risk, across the value chain of the enterprise. We are at the forefront of building business and technology solutions and IPs, applying advanced technology areas including Cloud Computing, Sustainability, Mobility, Social Computing and Analytics among others.
ENTERPRISE APPLICATION SERVICE

Wipro's Enterprise Application Services (EAS) practice proactively assists organizations in their business transformation initiatives and offers strategic vision which aims at business process transformation, thus helping reduce TCO, increase ROI and improve productivity. Our enterprise solution packaged applications include skilled resources and best-in-class technology for business process transformation.
WIPRO TOTAL OUTSOURCING

Wipro Total Outsourcing (TOS) services are targeted at achieving maximum value by providing end-to-end best of breed IT practices for your business. From technology optimization to mitigating risks, we fulfill your constant IT infrastructure and application demands while evaluating, deploying and managing flexible, responsive and economical solutions. Through our acknowledged quality processes and program governance frameworks, we help you achieve and sustain business momentum. Based on service level agreements (SLAs), we meet every need and objective of your business by providing IT infrastructure solutions that seamlessly align with organizational processes and practices.
WIPRO CONSULTING

29

Wipro Consulting, we help companies think ahead. Business today is evolving faster than at any other time in history, and tomorrow there are going to be challenges we can't even imagine today. But to survive and thrive, imagine that future, anticipate it. Wipro Consulting can give you the business analyses you need and follow through with implementation. As part of Wipro, the world's leading provider of integrated business, technology and process solutions, we can deliver a depth of resources that's unsurpassed by other firms. We have the flexibility to deliver solutions quickly and cost-effectively. And our confidence in our ability to think ahead makes us willing to be measured against any business outcomes. Wipro Consulting, help you get the advantage of future thinking - along with the advantage of being taken the rest of the way.
INFRASTRUCTURE MANAGEMENT SERVICES

Wipros Infrastructure Management Services cater to the three most crucial principles of global business: Growth Through Partnership, Service Delivery Excellence and Transformation Focused Execution. Their service delivery models are dedicated to ensure the high availability of your IT infrastructure and applications. From assuring you of the highest infrastructure security to quality processes, they provide your business a competitive edge in the market. To meet the varying needs of different organizations, they adopt a flexible approach to service delivery through onsite, multi-site and offsite engagement models. They offer Remote Monitoring and Infrastructure Support Services from our Global Command Centers (GCC) and Global Service Management Centers (GSMC) spread across India, Middle East, Malaysia, US, UK and Eastern Europe. The various infrastructure management services are the following. Business Service Management Wipro delivers holistic Business Service Management solutions that help organizations in effective integration of IT with business. Our Business Service Management ( BSM) Practice is capable of delivering end-to-end services covering the lifecycle of BSM adoption - starting from consulting on service management processes using ITIL framework, tools implementation to ongoing managed services on deployed tools. They have successfully delivered numerous engagements globally. With a combination of strong partnerships with market-leading BSM
30

technology providers, technically skilled and certified professionals, practitioner approach and global delivery model, they deliver unmatched business value to customers.

IT Service Desk Wipro IT Service Desk handles over 8.5 million contacts annually with its world class infrastructure support. The Service Desk provides an interface to users for the entire spectrum of service management activities. Service offerings range from automating existing service desks to implementing new ones, and consolidating IT service desks to incorporating web-enabled support. Their IT Service Desk - led by ITIL methodology, acts as the nodal point between service providers and end-users. The Wipro IT Service Desk provides end-to-end ownership of the calls till resolution. Wipro has a high pool of ITIL certified consultants and works on global infrastructure and processes, with capability to migrate and operate on large scale IT support and call centers. Data Center Service At Wipro, they have been helping enterprises drive business transformation by harnessing the power of technology. Leveraging technology expertise and decades of experience in managing multiple customers IT environments, Wipro has put together the right people, tools and processes to deliver an end-to-end array of data center services - from consulting and solution design to product supply and program governance. Wipro owns seven Data Center facilities occupying 360,000 square feet in India and the United States, spread across Mysore, Greater Noida, Omaha, Tempe, Leonia, Norcross and Brea. Our specially designed data centers are built from the ground up to provide security, physical environment and networking capabilities you need to support even the most mission-critical and complex applications - 24 hours a day, 365 days a year. Enterprise Security Wipro's Enterprise Security service protects an enterprises information assets through comprehensive management of security components and mitigates adverse impact on confidentiality and availability. Understanding these challenges faced by organizations, Wipro offers comprehensive Managed Security Services. Wipro Enterprise Security Solution practice
31

extends to a wide technology and services spectrum. To mitigate the risks through a high level of security for information assets our comprehensive service offering, covering all aspects of an enterprise's securit

CHAPTER IV RESEARCH DESIGN AND METHODOLOGY

4.1 OBJECTIVES OF THE STUDY: Primary Objective:
To find out the acceptability level of the pharmaceutical companies to outsource the IT

infrastructure. Secondary Objective To identify the companies using the in- house IT service and the companies outsource their business. To analyze the various challenges faced by the in-house IT teams. To identify the various benefits the clients want while they outsource their business.
To find out whether there is any significant relationship between the number of

employees working in the company and the outsourcing of the IT infrastructure. To find out whether there is any significant relationship between the annual turnover of the company and the outsourcing of the IT infrastructure. 4.2 HYPOTHESIS: Hypothesis1: H0: There is no significant relationship between the number of employees working and the outsourcing of the IT infrastructure. H1: There is a significant relationship between the number of employees working and the outsourcing of the IT infrastructure.
32

Hypothesis2: H0: There is no significant relationship between the turnover of the company and the outsourcing of the IT infrastructure. H1: There is a significant relationship between the turnover of the company and the outsourcing of the IT infrastructure

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It may be understood as science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. It is necessary for the researcher to know not only the research methods/ techniques but also the methodology. As far as this project is concerned, the predicament under study is the acceptability of the outsourcing by the companies in the pharmaceutical sector. 4.3 RESEARCH TYPE: The type of research used in this study is Descriptive Research. This research is the most commonly used and the basic reason for carrying out descriptive research is to identify the cause of something that is happening. 4.4 DATA COLLECTION METHOD: Data are of two types. They are Primary data Secondary data For the purpose of this project, data were collected from both primary as well as secondary source. Primary data: Primary data are those data that are collected afresh for the first time and which seem to
33

be original in character. Primary Data for the purpose of study was collected through questionnaire, one-to-one interviews and telephonic interview with CIO/IT head/IT Managers. Secondary data: Secondary data were collected from internal and external sources. Internal sources include information from company records and the company magazine. External sources are internet, text books and through web sites. 4.4 SAMPLE DESIGN The purpose of sample design is to give an accurate picture of some aspect of the marketing environment. Sample design is a definite plan for obtaining sample from the sampling frame. Sample design includes Sample unit, Sample size and Sampling technique.

Population of the Study All the pharmaceutical companies in the Bangalore city was selected for the study. A total of 78 companies were listed. Sampling Unit The sampling unit consisted of the pharmaceutical companies in the Bangalore city. Sample Size: Samples were collected from the fifty pharmaceutical companies in the Bangalore city Sampling Technique: The sampling technique used is Judgment Sampling. In judgment sampling, the researcher or some other "expert" uses his/her judgment in selecting the units from the population for study based on the populations parameters.

34

4.6 TOOLS FOR DATA ANALYSIS: The tools used for data analysis are Simple percentage analysis Correlation

Simple Percentage Analysis: Simple percentage is also used for this study. This method is nothing but the average of collected frequency. It is one of the simple and prominent methods used for analysis. Correlation: Correlation is statistical tool used to find out the significant association between two variables. It is also used to find out whether the variables have negative or positive relation.

4.7 LIMITATIONS OF THE STUDY

The information provided by the CIO/IT Head/ IT Manager may be biased. The study was conducted only in Bangalore. The study was conducted only for a period of 3 months. The sample for the study was only 50 there may be some changes in the results if the sampling size was increased.

35

The responses to questionnaires sent via emails were vague and the process was timeconsuming as the respondents hardly sent back their feedback within the expected time period.

CHAPTER V

ANALYSIS AND INTERPRETATION

5.1 PERSONAL INFORMATION ABOUT THE REPONDENTS The respondents for the study were the IT heads of the different pharmaceutical companies in Bangalore city. Information about the companies are given below

Table 5.1.1 Table showing number of employees working in the company

no of employe es working Frequency 8 17 11 8 6 50 Percent 16.0 34.0 22.0 16.0 12.0 100.0 Valid Percent 16.0 34.0 22.0 16.0 12.0 100.0 Cumulative Percent 16.0 50.0 72.0 88.0 100.0

Valid

>100 100-500 500-1000 1000-5000 <5000 Total

36

Chart 5.1.1 Chart showing the number of employees working in the company

no of employees working
40

30

20

10

Percent

0 >100 100-500 500-1000 1000-5000 <5000

no of employees working

INTERPRETATION: The above chart shows that out of 50 companies 16% of the companies have >100 employees, 34% have 100-500 employees, 22% have 500-1000 employees, 16% have 1000-5000 employees and 12% have <5000 employees.

37

Table 5.1.2 Table showing the annual turnover of the companies

annual turnov er of the company Frequency 9 11 12 10 8 50 Percent 18.0 22.0 24.0 20.0 16.0 100.0 Valid Percent 18.0 22.0 24.0 20.0 16.0 100.0 Cumulative Percent 18.0 40.0 64.0 84.0 100.0

Valid

>10cr 10-100cr 100-500cr 500-1000cr <1000cr Total

Chart 5.1.2 Chart showing the annual turnover of the companies

annual turnover of the company

30

20

10

Percent

0 >10cr 10-100cr 100-500cr 500-1000cr <1000cr

annual turnover of the company

38

INTERPRETATION: The above chart shows that out of 50 companies 18% of the companies have the turnover less 10Cr, 22% have 10-100Cr, 24% have 100-500Cr, 18% have 500-1000Cr and 14% companies have a turnover of more than 1000Cr. Table 5.1.3 Table showing the number of the company locations
numbe r of locations company have Frequency 22 12 11 3 2 50 Percent 44.0 24.0 22.0 6.0 4.0 100.0 Valid Percent 44.0 24.0 22.0 6.0 4.0 100.0 Cumulative Percent 44.0 68.0 90.0 96.0 100.0

Valid

>2 2-5 5-7 7-10 <10 Total

Chart 5.1.3 Chart showing the number of the company locations

number of locations company have

50

40

30

20

Percent

10

0 >2 2-5 5-7 7-10 <10

number of locations company have

39

INTERPRETATION: The above chart shows that 44% of the companies have less than two locations, 24% of the companies have 2-5 locations, 22% of the companies have 5-7 locations, 6% of the companies have 7-10 locations and 4% of the companies have more than 10 locations. 5.2 ANALYSIS OF THE RESULTS THROUGH TABLES AND GRAPHS Analytical tool: Simple Percentage Analysis Table 5.2.1 Table showing the companies having outsourced and In-house IT infrastructure
outsource d or in-house Frequency 13 37 50 Percent 26.0 74.0 100.0 Valid Percent 26.0 74.0 100.0 Cumulative Percent 26.0 100.0

Valid

outsourced in-house Total

Chart 5.2.1 Chart showing the companies having outsourced and In-house IT infrastructure
outsourced or in-house
80

60

40

20

Percent

0 outsourced in-house

outsourced or in-house

40

INTERPRETATION: The above chart shows that out of 50 companies 26% of the companies outsource their IT infrastructure and 74% of the companies have In-house IT facilities.

Table 5.2.2 Table showing the number of companies outsource partial and fully
partially or fully outsource d Frequency 8 5 13 37 50 Percent 16.0 10.0 26.0 74.0 100.0 Valid Percent 61.5 38.5 100.0 Cumulative Percent 61.5 100.0

Valid

Missing Total

partially fully Total System

Chart 5.2.2 Chart showing the number of companies outsource fully and partially
partially or fully outsourced
70 60 50 40 30 20

Percent

10 0 partially fully

partially or fully outsourced

INTERPRETATION:
41

The chart shows that out of 13 companies that outsource their IT services 62% have outsourced partially and 38% has outsourced fully.

Table 5.2.3 Table showing the companies that have remote and onsite IT service
re mote or on-site Frequency 29 21 50 Percent 58.0 42.0 100.0 Valid Percent 58.0 42.0 100.0 Cumulative Percent 58.0 100.0

Valid

on-site both Total

Chart 5.2.3 Chart showing the companies that have remote and onsite IT service

remote or on-site
60

50

40

30

20

Percent

10

0 on-site both

remote or on-site

INTERPRETATION:
42

The above chart shows that out of 50 companies none of the companies have remote management, 58% of them have Onsite IT and 42% have both remote and onsite.

Table 5.2.4 Table showing the number of members in the IT support team
numbe r of me mbe rs in the IT support te am Frequency 19 15 10 6 50 Percent 38.0 30.0 20.0 12.0 100.0 Valid Percent 38.0 30.0 20.0 12.0 100.0 Cumulative Percent 38.0 68.0 88.0 100.0

Valid

>10 10-20 20-30 30-40 Total

Chart 5.2.4 Chart showing the number of members in the IT support team.
number of members in the IT support team
40

30

20

10

Percent

0 >10 10-20 20-30 30-40

number of members in the IT support team

INTERPRETATION:
43

The above chart shows that out of 50 companies 38% of the companies have less than 10 persons in the IT support team, 30% have 10-20 members, 20% have 20-30 members, 12% have 30-40 members and none of the companies have more than 40 persons in the IT support team. Table 5.2.5 Table showing the satisfaction level with the In-house IT facilities
satisfication with in-house it Frequency 34 3 37 13 50 Percent 68.0 6.0 74.0 26.0 100.0 Valid Percent 91.9 8.1 100.0 Cumulative Percent 91.9 100.0

Valid

Missing Total

yes no Total System

Chart 5.2.5 Chart showing the satisfaction level with the In-house IT facilities
satisfication with in-house it
100

80

60

40

Percent

20

0 yes no

satisfication with in-house it

INTERPRETATION:
44

The above chart shows that out of the 37 companies having In-house facilities 91.89% of them are satisfied with the facilities and 8.1% were not satisfied.

Table 5.2.6 Table showing the major challenges faced by the In-house IT facilities
challe nge s face d in in-house IT Frequency Attrition 10 Providing career growth 6 Non availablity of 9 industry best practise Delay in technology/Process 9 adoption others 3 Total 37 System 13 50 Percent 20.0 12.0 18.0 18.0 6.0 74.0 26.0 100.0 Valid Percent 27.0 16.2 24.3 24.3 8.1 100.0 Cumulative Percent 27.0 43.2 67.6 91.9 100.0

Valid

Missing Total

Chart 5.2.6 Chart showing the major challenges faced by the In-house IT team
challenges faced in in-house IT
30

20

10

Percent

0 Attrition Non availablity of i Providing career gro Delay in technology/ others

challenges faced in in-house IT

45

INTERPRETATION: The above table shows that out of 37 companies 27.02% have attrition as the main challenge, 16.21% have providing career growth as the challenge, 24.32% have non availability of industry best practice, 24.32% have Delay in process adoption as challenge and 8.1% have other challenges.

46

Table 5.2.7 Table showing the benefits companies want while they outsource to an external provider
be nifts e xpe cte d while outsourcing to an e xte rnal prov ide r Frequency Save cost of delivery 10 Implement industry 13 best practise people management 7 Risk Management 4 others 3 Total 37 System 13 50 Percent 20.0 26.0 14.0 8.0 6.0 74.0 26.0 100.0 Valid Percent 27.0 35.1 18.9 10.8 8.1 100.0 Cumulative Percent 27.0 62.2 81.1 91.9 100.0

Valid

Missing Total

Chart 5.2.7 Chart showing the benefits the companies want while they outsource to an external provider

benifts expected while outsourcing to an external provider

40

30

20

10

Percent

0 Save cost of deliver people management Risk Management others Implement industry b

benifts expected while outsourcing to an external provider

INTERPRETATION:
47

The above chart shows that out of the 37 companies using the In-house facilities 27.02% of them want to save the cost of delivery as the benefit to consider outsourcing the IT to an external provider, 35.13% want to implement industry best practice as the benefit,18.91% want the benefit of people management,10.81% want the benefit the risk management and 8.1% want other benefits. Table 5.2.8 Table showing the acceptability level to outsourcing if benefits are given
Acce ping of outsourcing if be ne fits are giv e n Frequency Yes 30 No 7 Total 37 System 13 50 Percent 60.0 14.0 74.0 26.0 100.0 Valid Percent 81.1 18.9 100.0 Cumulative Percent 81.1 100.0

Valid

Missing Total

Chart 5.2.8 Chart showing the acceptability level to outsourcing if benefits are given

Ac ceping of o utsourcing if benefits a re given

100

80

60

40

20

Percent

0 Y es No

Ac c eping of outs ourc ing if benefits are given

INTERPRETATION:
48

The above chart shows that out of 37 companies 81.08% of the companies are ready to accept the IT outsourcing if benefits are given and 18.91% are not ready to accept even if the benefits are provided.

Table 5.2.9 Table showing the opinion of IT heads about the option of IT outsourcing
o p in io n ab o u t o u tso u rc in g F requency Percent Valid Percent ye s 39 78.0 78.0 no 11 22.0 22.0 T otal 50 100.0 100.0 Cumulative Percent 78.0 100 .0

Valid

Chart 5.2.9 Chart showing the opinion of the IT heads about the option of IT outsourcing

opinion about outsourcing

100

80

60

40

20

Percent

0 yes no

opinion about outsourcing

INTERPRETATION: The above chart shows that out of 50 companies 76% of them feel that outsourcing of IT support service is a good option for their business and 24% feel it is not a good option.
49

Table 5.2 10 Table showing the reason of IT heads for not considering IT outsourcing as good option
if no what is the reason Frequency Data security concers 2 Company policy 2 High investment 8 Total 12 System 38 50 Percent 4.0 4.0 16.0 24.0 76.0 100.0 Valid Percent 16.7 16.7 66.7 100.0 Cumulative Percent 16.7 33.3 100.0

Valid

Missing Total

Chart 5.2.10 Chart showing the reason of the IT heads for not considering IT outsourcing as good option

if no what is the reason

70 60 50 40 30 20 10 0 Data security concer Company policy High investment

Percent

if no w hat is the reas on

INTERPRETATION:
50

The above chart shows that out of the 12 companies that does not think IT outsourcing as a good option for their business 16.7% said it is because of the data security concerns, 8.33% said job security for the In-house team as the reason, 25% said its because of the company policy and for 41.7% its because of high investment for the outsourcing Table 5.2 11 Table showing the reason of IT heads for considering IT outsourcing as good option
if ye s what is the re ason Frequency Cost savings 10 Focus on core business 7 Improve quality 6 Operational expertise 13 Others 2 Total 38 System 12 50 Percent 20.0 14.0 12.0 26.0 4.0 76.0 24.0 100.0 Valid Percent 26.3 18.4 15.8 34.2 5.3 100.0 Cumulative Percent 26.3 44.7 60.5 94.7 100.0

Valid

Missing Total

Chart 5.2.11 Chart showing the reason of the IT heads for considering IT outsourcing as good option

if yes what is the reason

40

30

20

10

Percent

0 Cost savings Improve quality Others Focus on core busine Operational expertis

if yes w hat is the reason

INTERPRETATION:
51

The above chart shows that out of the 38 companies 26.32% consider cost savings as the reason for considering outsourcing as good option for their business, 18.42% consider focus on the core business as the reason, 15.79% considers that outsourcing will improve quality, 34.21% consider operational expertise and 5.26% companies have other reasons. 5.3 STATISTICAL ANALYSIS
Statistical Tool: CORRELATION

Objective: To find out whether there is any significant relationship between the number of employees working in the company and the outsourcing of the IT infrastructure.

Hypothesis: H0: There is no significant relationship between the number of employees working and the outsourcing of the IT infrastructure. H1: There is a significant relationship between the number of employees working and the outsourcing of the IT infrastructure.

Corre lations no of employees working 1 . 50 -.270 .058 50 outsourced or in-house -.270 .058 50 1 . 50

no of employees working Pearson Correlation Sig. (2-tailed) N outsourced or in-house Pearson Correlation Sig. (2-tailed) N

INTERPRETATION From the output obtained we can conclude that the significant value obtained is 0.058 which is greater than 0.05, so we accept the null hypothesis. That is there is no significant relationship between the number of employees working in the company and the outsourcing of the IT infrastructure.
52

Objective: To find out whether there is any significant relationship between the annual turnover of the company and the outsourcing of the IT infrastructure. Hypothesis: H0: There is no significant relationship between the turnover of the company and the outsourcing of the IT infrastructure. H1: There is a significant relationship between the turnover of the company and the outsourcing of the IT infrastructure.

Corre lations annual outsourced turnover of or in-house the company 1 -.471** . .001 50 50 -.471** 1 .001 . 50 50

outsourced or in-house Pearson Correlation Sig. (2-tailed) N annual turnover of the Pearson Correlation company Sig. (2-tailed) N

**. Correlation is significant at the 0.01 level (2-tailed).

INTERPRETATION: From the output obtained we can conclude that the significant value obtained is 0.01 which is less than 0.05, so we reject the null hypothesis. That is there is a significant relationship between the annual turnover of the company and the outsourcing of the IT infrastructure. Since the Pearson value obtained is -.471 there is a negative correlation between the annual turnover of the company and the outsourcing of the IT infrastructure. That is when the turnover of the company increases the outsourcing of the IT infrastructure decreases.
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CHAPTER VI 6.1 FINDINGS

Out of the 50 companies selected for the study 74% of the companies are having the In-house IT facilities and 26% of the companies are outsourcing their IT infrastructure.

Out of the 13 companies outsourcing their IT infrastructure 62% of the companies have outsourced partially and the 38% of the companies have fully outsourced.

Out of the 50 companies 58% of the companies are having the onsite management and 42% of them are having both the onsite and remote management. But none of them are having the remote management alone.

Out of the 50 companies selected for the study 38% of the companies are having less than 10 members in the IT support team. 30% of the companies are having 10-20 members in the IT support team and 12% of the companies have 30-40 members.

Out of the 37 companies that have In-house IT 92% of them are satisfied with the In-house facilities and 8% are not satisfied with the In-house facilities.

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Out of the 37 companies that are having the In-house IT 27% of them said that attrition is the major challenge they are facing in the In-house facilities. 24% of them think that non-availability of the industry best practice and the delay in process adoption are the main challenges, 16% of them think that providing career growth is the main challenge. And 8% of them think there are other challenges.

Out of the 37 companies having In-house IT 35% of them expects implementation of the industry best practice as the benefit to consider the outsourcing of the IT services to an external provider.27% said save the cost of delivery as the benefit they wants. 19% said people management is the benefit they expect while considering the outsourcing. 11% said they expect risk management and 8% wants other benefits.

Out of the 37 companies having the In-house IT 81% of them are ready to accept the IT outsourcing if the benefits are given and 19% are not ready to accept even if the benefits are given. Out the 50 companies selected for the study 78% of them think that IT outsourcing is a good opinion for their business and 22% thinks that IT outsourcing is not a good option for their business. Out of the 12 companies that think IT outsourcing is not a good option for their business 68% of them think it because of the high investment and 17% thinks because of the company policy and the data security concerns. Out of the 38 companies that think IT outsourcing is a good option for their business 34% thinks it because of the operational expertise they get while outsourcing, 26% thinks it as cost savings and 18% thinks they can focus on the core business if they outsource the IT infrastructure.

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6.2 SUGGESTIONS
Some of the medium scale companies feel that the investment for outsourcing the IT

infrastructure is very high. So Wipro can have separate packages for these companies within the amount they can afford. Since there is a lot of potential in these companies.
Should try to convert the potential prospects into clients as 81% percent have stated ready

to outsource their IT function.

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 Some of them feel that the set up time is so high. If they reduce the time many of them will consider outsourcing. Wipro should try to create strategies for the data security and job security issues since some of them are concerned with this. They should also concentrate on the small sized organizations. Some companies think the time taken for the implementation is very high. So Wipro should frame strategies for the quick implementation of the Service Level Agreements.

6.3 CONCLUSION
The study gives a better understanding of outsourcing companies concerns and helps in building future strategies targeted at resolving those issues. The study was about find out the acceptability level of the IT outsourcing in the pharmaceutical companies. From the study it was found that most of the companies in the sector are ready to accept the outsourcing if the benefits
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like implementation of the industry best practice and saving of the cost of delivery are provided to them. Many of the companies think that IT outsourcing is a suitable option for their business because of the operational expertise they get while outsource. Some small scale companies think it is not a good option because of the high investment needed for the outsourcing. Small and mid-sized organizations would stand to gain from the managed IT services while being able to access high-end softwares at very low fees. For small and medium businesses, outsourcing of the IT infrastructure provides them with access to powerful solutions and offerings that were previously available only to large enterprises. Outsourcing will thus empowered small and medium pharmaceutical companies to get the most secure, proven and reliable platform available in the market. Understanding the issues related to outsourcing helps to improve service delivery. There are so many small scale and medium scale companies in the sector so concentrating on them and their need will help the Wipro Infotech to change them as the potential customers. The study helps to gain a vast knowledge about the outsourcing and the major problems and challenges involved in it.

BIBILIOGRAPHY
Kothari C R, 1966 Research Methodology: Methods and Techniques, (2/e; New

Delhi:Viswa Prakasham) Ch.1, pp.30-38 Dewey J. (1910). How we think. New York, Heath.

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 Simon, H. A. (1955). A behavioral model of rational choice. Quarterly Journal of

Economics 69: 99-118.

Mittal B, B Ratchford, et al. (1990). Functional and expressive attributes as determinants

of brand-attitude. Research in Marketing 10: 135-155.

Philip Kotler (2005). Marketing Management. 11th edition. 182.

Quinn, J. B. (1999) Strategic outsourcing: Leveraging knowledge capabilities. Sloan Management Review 40(4), 921. Hoecht A & Trott P (2006), Innovation risks of strategic outsourcing, Tec novation, Vol. 26, pp. 672 681 Holcomb, T. R. and Hitt, M. A. (2007) Toward a model of strategic outsourcing. Journal of Operations Management 25(2), 464481. Insinga, R. C. and Werle, M. J. (2000) Linking outsourcing to business strategy. Academy of Management Executive 14(4), 5870. Jiang Bin, Belohlav James, Young Scott, (2007) Outsourcing impact on manufacturing firms value: Evidence from Japan Journal of Operations Management 25 885900 Bin Jiang, Amer Qureshi (2005). Research on outsourcing results: current literature and future opportunities Management Decision Vol. 44 No. 1, 2006 pp. 44-55 Emerald Group Publishing Limited

QUESTIONNAIRE A STUDY ON ACCEPTABILITY OF IT OUTSOURCING IN PHARMA SECTOR ON BEHALF OF WIPRO INFOTECH

General Information
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1. Name of the company : 2. Name of the Interviewee :

3. Designation & Contact No:

Company Details 1. Location of Company Head Quarters : 2. CIO / IT Heads Name & Contact No. :
3. No. of Locations company have

>2

2-5

5-7

7-10

<10

4. No. of employees working

>100

100-500

500-1000

1000-5000

<5000

5. Annual Turnover of the company >10cr 10-100cr 100-500cr 500-1000cr <1000cr

IT Infrastructure Details 1. Is the IT support function outsourced or In-house? Outsourced In- house

2. If outsourced partially or fully outsourced?

Partially

Fully

3. Is it remote or On-site? Remote On-site Both

4. No. of members in the IT support team? >10 10-20 20-30 30-40 <40
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5. If In-house, Are you satisfied with the In-house facilities? Yes No

6. What are the major challenges you face in In-house IT Services? a. Attrition b. Providing career growth c. Non availability of the industry best practice d. Delay in technology/ process adoption e. Others (Please specify).
7.

If you get the following benefits will you consider outsourcing your IT support services to an external provider? a. Save cost of delivery b. Implement industry best practice c. People management d. Risk management e. Others (Please specify)

8. Will you accept the outsourcing of IT support services if the above benefits are

given? Yes No

9. Do you think outsourcing of the IT support services will be a good option for your business?
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Yes 10. If no, why

No

Data security concerns High Investment 11. If yes, why Cost saving Others

Job security for In-house teams

Company policy

Focus on core business Others

Improve quality

Operational expertise 12. Suggestions

Signature

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