Outsourcing IT Functions Paper
Outsourcing can be defined as the outsourcing of a company’s non-core processes to a third party that would be considered an expert in that field ("A key strategic question: to outsource or not?," 2007). There are many factors that need to be weighed before a company can decide to pursue the outsourcing path, which could lead management in many different directions. No matter the benefits or risks involved, the final decision before the management of a company looking to outsource is whether or not outsourcing will provide a strategic advantage over the competition.
Factors for Outsourcing
One of the main reasons companies look to outsource is to save money on functions that are not deemed core activities ("A key strategic question: to outsource or not?," 2007). By turning over parts of their operations, that they feel can be better handled by an outside vendor; the company reduces costs incurred by having fulltime employees that are knowledgeable in the IT field. Another benefit or outsourcing is the access to a vendor that employs subject matter experts in the desired field ("A key strategic question: to outsource or not?," 2007). Outsourcing also provides the company with flexibility towards the level of support they need and the kind of services they require to properly support their operations ("A key strategic question: to outsource or not?," 2007). By balancing these factors management can get the technical expertise at the level and cost they want and not have to deal with the day to day functions of managing it.
Factors against Outsourcing
One of the major concerns with outsourcing is the standard of quality that will be provided by the selected vendor ("A key strategic question: to outsource or not?," 2007). The quality of service is a concern since the company no longer has direct control over all the aspects of the work being performed on its systems (“A key strategic question: to outsource or not?,” 2007). Also, since you are just one of the vendors many customers, response time may vary because they might have other customers with larger issues that will be handled first. The other major concern deals with information security (“A key strategic question: to outsource or not?,” 2007). By outsourcing, companies are opening their systems to a third party and adding additional risk in securing company and customer data. Management needs to evaluate their concerns about these areas and mitigate the risks involved by ensuring a contract with the vendor that is favorable to the company.
Costs of Outsourcing
The costs of outsourcing originate in the contract between the business and the vendor of the provided service. To help control these costs several factors need to be considered to develop a successful agreement. First, what is being outsourced needs to be fully defined, so as to limit any confusion on who performs what roles (Fjermestad & Saitta, 2005). Second, due diligence should be performed...