This website uses cookies to ensure you have the best experience. Learn more

Outsourcing It Essay

1003 words - 5 pages

Outsourcing Yet Another Service: IT
Ryan S. Pavlak BRIT (R)(MR)
Independence University

Outsourcing Yet Another Service: IT
In the world today saving the ever so precious dollar bill is the most important thing to almost every business. The outsourcing if information technology services is just another way for a company to potentially save money. Information technology services is not the first service to be outsourced and it is surely not the last. The reason it seems so beneficial is typically because of how mismanaged the internal information technology services, like what was taught earlier in this course. But is it really beneficial to outsource information technology services ...view middle of the document...

Large and small companies are both utilizing the growing outsourcing IT market, but one may be benefiting greater than the other.
Cons to outsourcing
When it comes to IT, managers often have a hard time calculating the cost of many of their functions. This is no different when it comes to outsourcing. In a survey that was performed by MIT Sloan Management Review out of 50 companies that were outsourcing their IT department, 14% were deemed a failure (Barthelemy, 2001). This is due to a few hidden cost of IT outsourcing. Vendor search and contracting, transitioning to the vendor, managing the effort, and transitioning after the outsourcing are four specific ways managers miss costs of an IT outsourcing.
Vendor Search and Contracting
Prior to selecting which firm a company wants to use for its outsourced IT department. This cost is usually significantly underestimated. Considering the service is the same for both large and small scale organizations; the cost to research, negotiated, draw up contracts, and have legal sign off on the contracts a company typically spends half a million dollars (Barthelemy, 2001). This is where large corporations have a significant advantage over small companies, at half a million dollars most small companies would have already spent their potential savings.
Transitioning to the Vendor
Once a vendor for the outsourcing is selected it is necessary for the vendor to learn your business in order to be helpful and functional. This extra cost of running two IT departments is difficult for managers to calculate. MIT Sloan Management Review found, “The average transition period when the organization actually incurred a cost was about a year. For 70% of the companies, the period was longer than 10 months” (Barthelemy, 2001). The key to transition to the vendor is knowing what you expect the vendor to do for your organization and informing them about it.
Managing the Effort
There are a few different areas where managing the effort can cost a company money. Monitoring to see that IT vendor fulfilled their contractual obligations, bargaining with IT vendors, and negotiating any needed contract changes...

Other Papers Like Outsourcing It

Insoucring/Outsourcing Case Essay

4548 words - 19 pages much capacity and talent are being committed to producing simple, commodity-type items that provide small differentiation within the marketplace. FlexCon concluded that in its attempts to preserve jobs, it has insourced parts that are easy to manufacture, while outsourcing those that are complex or challenging. Producing commodity-like components with mature technologies is adding little to what FlexCon's customers consider important. The

Review The Pros And Cons Of Outsourcing

3274 words - 14 pages Using the example of one or more types of outsourcing (IT, HR, etc) review the pros and cons of outsourcing and examine its implications for future firm strategic direction. Introduction Outsourcing has become an increasingly popular strategic tool for worldwide organizations. Due to two key phenomena such as technological advances and globalisation, most organizations have be forced to continuously produce goods and services in higher

Outsourcing As A Supply-Chain Strategy

540 words - 3 pages Abstract The Darden Restaurant chain is responsible for serving over 300 million meals annually throughout the United States and Canada in over 1,700 restaurants. Three of the most popular casual dining restaurants are the Olive Garden, Long Horn Steakhouse, and Red Lobster; with over 180,000 employees it is the largest full-service restaurant company in the world (Darden, 2012). Darden has found means of outsourcing certain aspects of the

1. Perform A Quantitative Insourcing/Outsourcing Analysis Using The Data Provided. What Qualitative Issues Might Affect Your Final Decision? Identify Any Costs Or Issues That Are Not Part Of Your...

4548 words - 19 pages much capacity and talent are being committed to producing simple, commodity-type items that provide small differentiation within the marketplace. FlexCon concluded that in its attempts to preserve jobs, it has insourced parts that are easy to manufacture, while outsourcing those that are complex or challenging. Producing commodity-like components with mature technologies is adding little to what FlexCon's customers consider important. The

It To China

2560 words - 11 pages Abstract This paper will discuss what outsourcing is about and the impact of outsourcing information technology to China. It will take a look at the benefits, challenges and risks faced when a company makes the decision to outsource their information technology functions to China. As globalization accelerates and competition intensifies, outsourcing has become a strategic solution for many corporations and governments around the world. More

Out Sourcing

860 words - 4 pages The Long Term Effects of Outsourcing on the US Economy The impact of outsourcing in the US economy has evoked extensive emotions to many, especially from presidential candidates and labor groups who criticized its practice. But economists and chief executives defend it as a natural succession of the economy. In today’s fast paced economy, it’s not new that outsourcing chased cheap labor costs around the globe for decade. But in recent years

Out Sourcing Your Privacy

1769 words - 8 pages | Outsourcing your Privacy | | | 4/20/2014 | Business Law Final | | Perhaps BPO is more of a threat than the NSA, when it comes to Privacy! | Outsourcing your Privacy Business Law Final Webster’s dictionary defines privacy as freedom from unauthorized intrusion. The meaning of what privacy is to an extent is driven by the society and its moral norms. Reasonable expectations of privacy in public places must change as our social

Bharti Airtel

1413 words - 6 pages Hai |1 Case 5 – Strategic Outsourcing at Bharti Airtel Limited 1. Do you think Bharti should enter the outsourcing agreements outlined by Gupta? What do you see as advantages and disadvantages of such agreements? In my opinion, Bharti should go ahead with its outsourcing agreements outline by Gupta. There are advantages and disadvantages of delegating its telecommunications and IT networks to vendors. First of all, Indian market for

International Cotton Trade- The Travels Of A T-Shirt In The Global Economy

3386 words - 14 pages continually change and become more competitive with new globalized economic factors. The United States, as a major consumer in all facets of the apparel industry, has always looked for ways to reduce costs by outsourcing their productions outside the U.S. As a result, some groups think that this has led to domestic unemployment. But globalization is not the only source of this; it is the advancement of production technology. Productivity has been

Thinking Ethically - Offshoring

832 words - 4 pages . For U.S. based companies who partner with third-world companies to save money, they must take a stand to make sure they are doing it the right way – the ethical way. Outsourcing may be the new trend to save money for the parent company, but all aspects of outsourcing must be considered and continuously audited – especially for brand protection. Outsourcing abroad can be successful if done correctly and can certainly help global economics. The

Buiness

1015 words - 5 pages I. Summary In the year between 1999 and 2001, Dick Brown was hired as the CEO and chairman of EDS (Electronic Data Services) Corporation which was one of the largest players in IT outsourcing to turn around EDS from down profits, flat revenues, indecisiveness, poor accountability, and organizational structure that did not fit its environment. Brown places a strong focus on the customer to provide them meaningful derive value. In order to

Related Essays

Outsourcing Essay

566 words - 3 pages outsourcing Michael Hiltzik has a fantastic column on Boeing’s outsourcing disasters in the LA Times; it’s well worth reading the whole thing, complete with a link to a prescient 2001 paper by Boeing technical fellow LJ Hart-Smith. Hiltzik’s point, which is undeniable, is that Boeing’s outsourcing mania has cost it billions. It’s not a new idea (Reuters ran this special report in January), but it’s rarely been this well expressed: Boeing’s

Outsourcing Jobs Essay

2350 words - 10 pages Outsourcing Jobs I think it is interesting to know the positive and negative arguments about outsourcing. On one hand, there is the current uproar about illegal immigrants swarming in to the U.S. to do the jobs that Americans don’t want to do. And on the other hand, there is the continuing outcry about jobs going overseas. This would be the outsourcing of jobs that Americans would be willing to accept if the corporations were not so adamant

Business Outsourcing Essay

1418 words - 6 pages care company you would not outsource to a credentialing company that has not been recognized for their quality of work by the National Committee for Quality Assurance (NCQA) or URAC. As the saying goes, time is money, so naturally those two benefits of outsourcing also go hand-in-hand. The average hospital takes five months to credential a physician while a Credentialing Verification Organization (CVO) could do it in a fraction of the time - as

Assignment 4 Outsourcing

277 words - 2 pages When it comes to outsourcing, there are often many advantages as well as disadvantages.  A few key points that I researched about both sides when it comes to outsourcing: Advantages of Outsourcing Outsourcing allows management to defer the details to a specialized company. Removing the details allows management to focus on the larger issues within the organization. Typically, the specialized company that handles the outsourced work boasts