The word outsourcing is often heard in the world of business today. It is
something which has affected the business of almost every nature and every
nation. Outsourcing is occurring in almost every country of this world to some
extent. There are some leader countries in this field of outsourcing such as
India and China. Before moving towards the topic of this article let us first
understand what outsourcing is.
What is Outsourcing?
When discussed in
simple words outsourcing is simply 揳 formal agreement with a third party to
perform a service for an organization? A more comprehensive definition for
outsourcing would be that outsourcing is the concept of taking internal company
functions and paying an outside firm to handle them. It is basically done for
the following major reasons:
-To save money in terms of lowering
costs
-To improve quality
-To free company resources for other
activities such as focusing more on competencies
The concept of
outsourcing began with the data-processing industry and today it has spread to
vase areas which comprise of tele-messaging and call centers. It would not all
be wrong to say that outsourcing is the surge of the next generations. Another
name used for outsourcing is off shoring which has the same meaning as
outsourcing.
Technically speaking, outsourcing is not merely the contract
with a third party to perform a service for an organization, but it also
involves transferring a significant amount of management control and
decision-making to the external supplier. The process of outsourcing is very
much formal like other business processes and it always includes a considerable
degree of two-way information exchange, coordination, and trust.
The concept
of outsourcing gained popularity in the mid 1990�s since then the trend of
outsourcing has increased to a great extent. The reason for this increase in the
popularity of the concept of outsourcing was the rapid growth in the number of
high-tech companies in the early 1990s that were often not vast or large enough
to incorporate and run large customer service departments of their own.
Different Techniques of Outsourcing
The concept of outsourcing was
adopted by different organizations in different methods such as in some cases
the companies who desired to outsource their customer service:
-Hired
technical writers in order to write simplified usage instructions of their
products
-Index the key points of information
-Contracted with
temporary employment agencies to search for, train and hire generally
low-skilled workers to answer their telephone technical support and customer
service calls.
The most wide spread method of outsourcing being adopted
throughout the world is of call centers. The people employed at the call centers
answered the query calls of the customers, where the information needed to
assist the calling customer was indexed in a computer system. In most cases the
agents were not liable to tell the customers that they were not directly
associated with the original manufacturer.
Outsourcing IT
Outsourcing
IT is defined as using outside vendors to create, maintain, or reengineer IT
architectures and systems. The methods of outsourcing that have been discussed
earlier in this article are those which have now become old, one of the latest
one is outsourcing IT. The process of outsourcing IT involves the effective
management and operation of information technology assets of corporations from a
remote location. To explain this concept, consider the example of the management
of a computer network of a large corporation which includes outage monitoring,
alarms monitoring, remote monitoring of data centers, etc. The nature of these
operations is complex and requires a real-time support when needed. Hence it can
be assumed that such processes cannot be easily outsourced to places where there
is a big difference in the time zones. Such tasks are outsourced to comparable
time zone locations, which are competitive.
Outsourcing IT- Is it the best
option for your organization?
From all the facts discussed above we can
gather that outsourcing IT is beneficial for organizations in many ways out such
as:
-Lower costs, which might be due to economies of scale or lower
labor rates
-Variable capacity
-The ability to focus on core competencies
by ridding yourself of peripheral ones
-Lack of in-house resources
-Getting work done more efficiently or effectively
-Increased
flexibility to meet changing business and commercial conditions
-Tighter
control of budget through predictable costs
-Lower ongoing investment in
internal infrastructure
-Access to innovation and thought leadership
-Possible cash influx resulting from transfer of assets to the new provider
(The ABC抯 Of Outsourcing)
All of these facts contribute largely to the
efficient working of an organization.
Now the question stand that is
outsourcing IT the best option for your organization?
To decide on the answer
for this question, the organization who desires to outsource its IT must
consider the following aspects first:
-Does the organization posses the
internal resources to run existing mission-critical systems
efficiently?
If the answer to this question is no, then outsourcing IT
would be a good step for the organization. As the organization does not have the
internal resources that are required to manage its information systems,
outsourcing IT would have a positive impact on the efficient running and
operation of these systems.
-Is the organization as a whole ready to
consider high degrees of organizational and cultural change, in terms of
managing its IT operations?
Only when the answer to this question is yes,
outsourcing IT would prove to be beneficial for the organization as the people
working in the organization would readily adapt to the changes occurring as a
result of the IT being outsourced to a third party and work according to the
changes
-Does the organization continually need to develop new business
and technical interfaces for its day-to-day operations? If yes, is it really
more cost-efficient to deploy internal staff to execute these tasks?
When
these questions are discussed, it has been observed that if the organization
requires dynamic changes in its business and technical interfaces continually,
it is better to outsource its IT in order to manage these dynamic
changes
-Based on needs and budget, to what extent will the organization's IT
functions be outsourced? (Lam, Outsourcing IT - Is it the Best Option for your
Organization)
The organization also needs to decide on the budget and need of
its IT functions to be outsourced, it may not be necessary to outsource all of
the IT tasks, some minor ones could be performed by the organization itself.
The process of outsourcing IT is not as simple as outsourcing of customer
services or other such tasks. It is a complex decision. The decision should be
based on a solid understanding of departmental performance. It can be said
without doubt that outsourcing IT is the best option for your organization if it
lowers costs and increases the efficiency of the IT systems of the organization,
such that its productivity increases. It has been found be studies that through
the process of outsourcing IT organizations become able enough to formulate
competitive strategies that will have a positive impact on their financial
positions in the ever competitive global marketplace.
The company which
desires to outsource IT must also realize the fact that the total amount of an
outsourcing contract is not the exact representation of the money and other
resources that the company would be required to spend while it outsource IT
functions to a third party.
The Best Places in the World to Outsource IT
for organizations
As it has been observed by considering the outsourcing
trends in this era, India seems to be leading the outsourcing industry but when
we talk specifically in terms of outsourcing IT, United States is the best
place, according to A.T. Kearney Global Services Location Index 2005. This index
also identified Singapore as the Best IT services business environment. India
and China also dominate over the IT services in the Asian region to less extent.
Other attractive destinations for outsourcing IT are Central and Eastern Europe
but the costs are higher there (The ABC抯 of Outsourcing).
No comments:
Post a Comment