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It Outsourcing Essay

804 words - 3 pages

Running head: IT OUTSOURCING PAGE \* MERGEFORMAT 1 IT OUTSOURCING PAGE \* MERGEFORMAT 4
IT OutsourcingOutsourcing is an agreement in which one company is appointed by another to do work that was once completed in-house or could be provided within the organization. This is an increasing trend that is becoming more common within the information technology (IT) department of the organization. IT outsourcing can range from one piece of the IT group to the entire IT management of a company being outsourced (Rouse, 2007).Outsourcing FactorsOutsourcing has many pros and cons associated with it. Often, organizations feel that the advantages outweigh the disadvantages. However, it is all dependent on the company and what pieces they are outsourcing. When making a decision to outsource, there are many factors that should be addressed. Some questions that address whether or not to outsource and the factors involved can include:Is this project a core business process?Will specialized services be necessary and what is the duration?Is confidential information involved?Is there staff available or is new talent required?Is close management of the day-to-day work required?Asking these questions can work through many of the confusing pieces that can be brought about by outsourcing IT projects (Recca, 2014). There are also factors that can lead to not outsourcing IT functions within an organization. These can include, but are not limited to lost product or service quality, hidden costs, and the potential threat to security and confidentiality (Bucki, 2014).Risks and Benefits of OutsourcingThere are risks and benefits to outsourcing IT functions in an organization. Some of the risks that can be experienced with outsourcing include:Loss of control of operations and deliverables that are outsourcedLoss of sensitive data or confidentialityDelays in work output and possible inaccuraciesHidden costs that can lead to financial lossPoor communication and potentially lower productivityEven with the potential risks that are associated with outsourcing, the benefits for an organization can also be advantageous. These benefits can include:Allows focus on core processes to be returned to the organizationCost savings and reduced overhead costsPotential increase of productivity and efficiencyFlexibility in staffing and developing current staff skills in other areasPrior to any organization making a decision to outsource any part of the business, the risks and benefits should be thoroughly investigated.CostsCosts can originate from different levels within an outsourcing agreement. There are primary activities, secondary activities and incremental costs (Lauren, 2014).Most of the costs associated with outsourcing revolve around the primary activities that the company is contracted to do. These are the main reason that the organization has chosen to outsource IT. Some outsourcing firms may offer secondary...

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