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Outsourcing |
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Introduction Outsourcing is the activity of contracting other specialised companies to perform the business processes that organisations can’t or do not wish to undertake themselves. Traditionally, IT outsourcing has involved an external service provider being engaged via a formal contract to deliver part or all IT functions to achieve specified results. ... To date, outsourcing contracts have not usually included applications development, IT&T security policies, or strategic planning, as many organisations see these aspects as critical to their business. Outsourcing vendors are also commonly involved with addressing support and manpower shortage issues 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 massive move to outsourcing presents a series of new challenges for organisations, both public and private. With the increasing demands on organisations to gain greater access to cutting-edge technologies, to highly skilled people, and to exit non-core activities, organisations are seeing IT outsourcing as the way forward. ... The most compelling benefit of outsourcing is cost savings, which, by some estimates, is 20 to 40 percent less than the expense of maintaining the same function or process in-house (U. ... Several arguments can be made about the reduction of costs for the corporation under outsourcing. Through the volume buying and processing power capabilities of the outsourcing vendor, it would be expected that the corporation will be able to acquire the use of software and hardware at a lower cost than if they had to purchase, license, and maintain the software themselves. An outsourcing company may be able to offer a broader range of technical skills from its pool of available personnel, as they can be expected to have more specialists on their payroll. ... Costs may always vary, but outsourcing can be used in an attempt to reduce that variability for a given period of time. ... Another facet of outsourcing is a perceived mitigation of responsibility for IS in the enterprise. ... In outsourcing, the ultimate responsibility for the success or failure of the IS operation remains with those corporate executives and managers who are assigned to negotiate with the outsource provider and ensure that all goals and objectives are being met. ... In the new scheme of outsourcing, all of these become negotiable, and often only negotiable after the service level agreement (SLA) is put into place. ... In the classic outsourcing environment, the executive level of a corporation and an outsourcing company agree to split the corporation’s personnel into two groups. Most of the rank-and-file employees within the IS/IT structure of the corporation become employees of the outsourcing company; executives, selected key management members, and a handful of technical personnel will often remain behind with the corporation as part of the overseeing and negotiation team. ... The Executives Typically, the members of the executive staff will remain with the corporation that is outsourcing its IS/IT function. ... Executives should be aware that and outsourcing provider will attempt to develop contracts most favorable to itself. ... During the transition period to outsourcing, a priority of the executive should be the retention of key personnel. ... This is a challenge because some, but not all of the personnel may want to remain with the corporation after the outsourcing procedures are completed. After the transition to outsourcing, the advantage of being in the role of a customer should and will be used by the executives to benefit one’s company and its interests. ... If it existed before outsourcing, a great deal of it might disappear. ... This doesn’t preclude the existence of tenuous political situations during the transition period to outsourcing. The fears and uncertainties mentioned above may exist within the staff and perhaps be amplified during the months leading up to the outsourcing. ... After the transition, the roles of many management personnel will remain or revert to what they were prior to outsourcing, with one major exception – they are now serving the customer, and not just providing an internal function to a group of other corporate departments. ... What should technical personnel do before the outsourcing process begins? ... It is also assumed that as part of the outsourcing project, a formal service level agreement will be implemented. ... Most technicians will be transferred to the company that provides the outsourcing services. ... If one has embraced a specialized computer performance evaluation (CPE) skill such as capacity planning or chargeback or performance, there may be more than one client company under the outsourcing company’s umbrella to be served with it. |
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Title: Outsourcing
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