This is about computer failure of Royal Bank of Scotland (RBS) that happens in India. It is said that it happens because of “inexperienced operative” by Indian staff was accidentally wiped information when doing software upgrade. It is also a blame that the problem occurs because of outsourcing. But, it has been opposed by Stephen Hester, the chief executive of RBS because there was no evidence that outsourcing had caused the problem. However, it is already happen and the company needs to responsible to what had happen. Even though the problem was solved in three days, the company has to bear losses from 17 million customers and it created a backlog of more than 100 million transaction and all the losses is cost up between £50 million and £100 million.
Nowadays, many large companies are using outsourcing through IS/IT sector it is because the company was not in the field of IT / IS also in order to gain benefits to their company especially reducing expenses. It also to ensure that the company can focus on their core business and give other operation to outsourcing company that is expertise on the field.
Critically evaluate the competitive advantage that can be gained by companies through IS/IT outsourcing. Provide suitable example to support your answer.
Competitive advantage is when a company or country can produce a product or services at the lowest opportunity cost compare to their competitor. Meanwhile, outsourcing is when one company outsourced their portion of work or job to another company that are more expert and experienced to handle the task and also almost every large company outsources their portion of work or job in order to gain competitive advantage.
There are some competitive advantage that can be gained by companies through IS/IT outsourcing. One of the competitive advantages is to reduce labor cost. Most of large companies outsourced their portion of job to another company or country in order to reduce labor cost. With that the companies can save a large amount of capital and generate more revenue. It has been proved because the Royal Bank of Scotland, NatWest and Ulster Bank are hire staff from India that based in Hyderabad. IT jobs that are offered for Indian staff are only paid as low as £9,000 compared with their British colleagues where has been paid £50,000.
Second of the competitive advantage is freight payment and auditing. According to The state of Logistics Outsourcing (2010), there are approximately 40 percent of North American firms outsourced some part of their freight bill payment activity. When implement freight payment and auditing in company as outsource, the company will get many benefits such as save time and cost. Time can be saved when it reduce administrative affairs and provide with 24 hours online report, data and payment process. Customers can view and check all the data 24 hours through online and at the same time it can reduce errors. All the service provided...