It Outsourcing

Introduction

Large enterprises and small businesses often choose to outsource their information technology (IT) systems and services for a variety of reasons. This choice carries with it some obvious benefits and some often not so obvious risks. Companies choosing to outsource IT must weigh the benefits and risks carefully, take measures to attenuate the associated risks and prepare their employees for the change by launching a campaign about the benefits of outsourcing.

Decision Factors of Considering Outsourcing

Offshore Outsourcing is viewed as a key tool to reduce costs. The basic advantages are the reduction in project timelines and savings on account of lower labor costs. There are some new challenges associated with the outsourcing that face a company when embarking on this process. Additional costs on vendor selection, legal costs, and transition costs are sure to be incurred. Therefore, in spite of the obvious savings that can be realized, not many outsourcing vendors have been able to establish their ability to provide positive ROI to their clients, especially so in complex projects.

While there could be any number of reasons for outsourcing, the main ones can be listed as:

1.) Achieving economies of production

2.) Developing the technological advances and manufacturing processes.

3.) Improving the customer service delivery processes.

4.) Focusing on and improving core competency areas.

5.) Outsourcing due to lack of trained, qualified manpower.

Risks Associated with Outsourcing

Anytime you give someone else responsibility for an aspect of your business, whether a full-time new hire or an outside vendor, there is risk involved. Did I hire the right person/company to do the job? Will they do what they are supposed to do? How will they "fit" with existing employees or departments? These are the questions that nag owners of small businesses when handing over the reins to a new employee or vendor.

Business owners who consider outsourcing IT functions need to be aware of the following risks:

1. Some IT functions are not easily outsourced. IT affects an entire organization; from the simple tasks employees do every day to the complex automated aspects. Be sure the outside vendors are qualified to take care of your greatest needs.

2. Control may be lost. Critics argue that an outside vendor will never be as effective as a full-time employee who is under the same management as other employees. Other concerns include confidentiality of data and disaster recovery. However, a supervisor that is knowledgeable in managing an IT staff member