Global Business: Outsourcing Essay

3591 words - 15 pages

Competitive advantage by using IS/IT outsourcing is needed in business operation nowadays to outperform the competitors. The main reason for companies to go for outsourcing is related to the skilled IT resources and ability to stay technically updated with the latest technologies that competitors have been using. In addition, one of the contributing factors on doing outsourcing is IT outsourcers or service providers are seen to have access to highly skilled people and their certain area of expertise that the companies is missing. There are few other competitive advantages that can be gained by companies through IS/IT outsourcing as stated in below.
First, the company can cut cost of their payroll for employees because IT professional and technician are expansive in their salary perspectives. IT professionals often have large salary requirements and depending on the size of your business, you may not be able to justify paying that much salary (Luke Arthur 2013). This is cleared factors that can be gained in order to cut cost of paying salary to the employee, and also becoming a risks if hiring inexperience employee that is unknown they are capable or not of doing the job that can caused harm to the company.
Second, the company also can reduce overhead or the need of expanding room and space for employee. For example, the banking sector companies want to key-in data of the cheque. Because of large number of cheque needs to be key in, they decided to increasing the office space and staff also. However, the current location is very expensive and there is no room to expand. They can outsource this operation in order to reduce the need for office space to another company that is capable and having enough resources to handle and manage those works.
Third, the company can focus on core business or activities, such as Maybank outsourced their IT infrastructure to CSC. CSC is company that providing a secure data center and recovery site, an application for banking transaction for faster processing, a high-bandwidth connectivity from HQ, branches, ATM machines, the main data center, disaster recovery center and also helpdesk. By doing so, Maybank can focus on their main businesses instead of wasting their time and money to find the IT professional that consuming human resource and financial expenses. Outsourcing those activities will allow refocusing on those business activities that are important without sacrificing quality or service in the business operation. It also give competitive advantages with having the most advance IT infrastructure compare to another banking companies for example.
Lastly, develop internal staff is one of competitive advantage for the company. It is because of outsourcers or services provider have access to highly specialized IT skills and with the latest technologies that can compete with another companies. Internal staff will be exposed with a specialized trainings and experiences in various outsourcing operation will enhance...

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