Globalization has created intense competition for firms forcing them to seek innovative methods to ensure competitive advantage in a dynamic business environment. Organizations have learnt the importance of concentrating their resources on development of their core competence and outsourcing non-core processes to external agencies for higher performance.
Concept of IT Outsourcing
The concept of outsourcing has originated from American terminology which means “outside resourcing.” The term has been extended for use in business vocabulary to denote the process of outsourcing organizational work to an external agency or organization. IT outsourcing refers to the process of allocating IT related processes and tasks by an organization to an external agency or partner. The development of information systems has become highly expensive thus making IT outsourcing as an attractive option for companies that do not specialize in technology. For example, it does make sense for a recruiting firm to outsource its IT processes to an external agency and concentrate on its core process of employee recruitment. Some of the core benefits of outsourcing for organizations include cost reduction, control on operations, risk sharing, and expertise in IT.
Should you outsource IT?
Companies however need to conduct a careful analysis of their business in order to decide if outsourcing is a viable and a favourable option for them. Outsourcing is often misinterpreted as a measure to reduce costs, rather than a necessity for business. It may be advantageous for small and medium enterprises to opt for outsourcing for their key processes, however large business set-ups need to exercise great caution when option for IT outsourcing. Some of the disadvantages of outsourcing include lack of adequate information about the business processes followed by the outsourcing partner which leaves the outsourcing organization with some ignorance on the business aspect. Additionally, the results of outsourcing are not immediate. Organizations may have to face as much as 20% decline in the labour productivity since they need to spend substantial time in knowledge transfer to the outsourcing partner.
Outsourcing of information technology is therefore a mixed baggage. Organizations need to evaluate the risks as well as the benefits expected from IT outsourcing before deciding if they wish to outsource their business processes. Some of the key points that may be handy for companies planning to outsource IT include:
If you have been able to answer the above questions successfully with clarity, outsourcing may bring benefits for you.
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Email us in strict confidence today to help you with a customized IT outsourcing proposal.
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