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Week9_DueMon_09-03_Expand Facfs-Trends of IT outsourcing

Facts and Trends from Research of IT Outsourcing


IT outsourcing can be a one stop IT solution for companies providing IT Enabled services. These companies provide high quality, time-bound and cost-effective services. Typical services can include:
*Data Entry
*Forms Processing
*Back Office Operations
*Insurance Claims Processing
*Medical Transcription
*Data Conversion
*Scanning, Image Editing, OCR, ICR, OMR services
*Web-Designing, Web Promotion
*Call Center

These services are usually determined by a need in a business when it decides that it would be more cost effective to use an outsourced company, reducing capital infrastructure costs.

Outsourcing allows the company to focus on core business only, thus improving employee satisfaction with higher value addition jobs and making the best use of competitive resources available worldwide.

Using an outsourced company would give you the same standard hardware and software platforms available worldwide and would be high speed and would have a low cost of Telecommunications, making the Internet the global communication medium and allowing on line data processing possible from any location. (Casale 2001)


Today, companies have to dip into the knowledge bases of their suppliers to innovate customers. Buyers must have input at the formative stages of a supplier's new strategy. Buyers only have the power to change things while the ideas are still nascent. (Godwin 2000)

Outsourcing can be very beneficial to a company especially if the business manager takes a hard look at the core competencies. If the manager can revisit the areas of the company that aren't directly involved in those competencies, consider whether outsourcing can enable the manager to spin off those tasks and let another company take over the management responsibilities for that work or use modern communication technology to work closely with the people - now partners instead of employees are doing the work.


References

Casale, Frank J.; (2001); Important factors for successful outsourcing Founder and CEO The Outsourcing Institute. October 2001
Godwin, (2000) Article: Vendors' ERP Outsourcing Picks Up and Takes Off by Information Week, CIO magazine, Financial Times of London, InfoWorld, The Economist, and Fortune

Week8_DueMon_08-27_Research and discuss a think TANK of IT Outsourcing

Research and Discuss of
Information Technology Outsourcing

Although the mix of factors raising the possibility of outsourcing varies widely from one company to another, there are a series of themes that explain most of the pressures to outsource. First of all, general managers concerns about cost and quality drive outsourcing.

The same issues such as getting existing services for a reduced price at acceptable quality standard came up repeatedly (Jones, 1997). Second, failure to meet service standards can force management to find other ways of achieving reliability.

It is not atypical to find a company in which cumulative IT management neglect eventually culminated in an out-of-control situation the current IT department could not recover from. Management can see outsourcing as a way to fix a broken department. Third, a firm under intense cost or competitive pressures, which does not see IT as its core competence, may find outsourcing a way to delegate time-consuming, messy problems so it can focus scarce management time and energy on other differentiators.


Next, several financial issues can make outsourcing appealing. One is the opportunity to liquidate the firm s intangible IT asset, thus strengthening the balance sheet and avoiding a stream of sporadic capital investments in the future. Also, outsourcing can turn a largely fixed-cost business into one with variable costs. This is particularly important for firms whose activities vary widely in volume from one year to another or which face significant downsizing (Manufacturing and Technology News, 2003).


Companies are increasingly outsourcing the management of information technology (IT) for reasons that include concern for cost and quality, lagging IT performance, supplier pressure, access to special technical and application skills, and other financial factors. The outsourcing solution is acceptable to large and small firms alike because strategic alliances are now more common and the IT environment is changing rapidly.


Finally an important factor is cultural conflicts. What is accepted in one culture may be different in another, causing worker and management related problems. For instance the role of leadership in an organization or the number of hours a worker is expected to work a week. These variables have to be scrutinized by the outsourcing company.


Outsourcing has identified numerous potential benefits. Financial benefits from outsourcing included rapid funding of new systems development and economies of scale and scope. As consolidate infrastructure through IT outsourcing, a firm can experience cost reductions in hardware and software licensing, facilities, and support headcount. Outsourcing, also, can capitalize on an outside vendor s extensive IT problem solving knowledge. An outside vendor had the ability to get more of the technology that came out.

They could spend money on investments that a company couldn’t afford internally. That opens up a lot more avenues to future technologies. An outside vendor would manage the IT function more efficiently. A vendor s main competency is managing computer systems. Through their skills, leverage, and economies of scale, they could provide a level of efficiency that could not be achieved at the outsourcer.

Finally, Perhaps most important, outsourcing allow internal IT managers to focus on the development of a new IT infrastructure. Underlying the outsourcing effort is a fundamental strategy to offload legacy applications and operations so a firm could focus on developing new strategic application to support the global business processes, which were being reengineered.


References


Jones. W 1997. Outsourcing basics. Information Systems Management
Moran, Nuala. 1998. Core of the matter: outsourcing information technology functions. The Financial Post.