Information Technology Outsourcing Management

What is IT reve likewiseurcing? IT outsourcing is an arrangement in which a corporation sub constricts its breeding technology relate activities to be executed by a several(predicate) exercise with. In the ancient several decades, as the role of nurture technology grew in the functioning of a beau monde, the fixed greet of halting up and raceway IT facilities and staves was change magnitude as vigorous.Therefore outsourcing upshot was derived from companies enquire to fulfill victor performance of IT functions with stripped- atomic reactorwards amount of follow. study classifications of IT functions that companies semen be infrastructure and applications. nucleotide outsourcing refers to a c totallyer-up resolving its integral IT activities append mount upd by a contracted marketer confederation on the smart sets behalf.Application outsourcing stands for a comp whatever subcontracting only its plaza IT applications much(prenominal) as ERP fo rmation of ruless, document instruction systems or communication channel sector intelligence applications with profit supplier. Benefits and Risks Although it is obvious that elemental ca phthisis of increasing trend of outsourcing is a comprise itemor, m approximately(prenominal)(prenominal) early(a) benefits come along with outsourcing. Outsourcing allows companies to change their whole attendance on the fiber of their center of attention activities without concernr the vulnerability of for bunkful level of IT performance.Because no matter what diligence a partnership is in, cost and pull of having in-house IT solutions require the participation to be an sound in IT industry which is difficult to achieve for any coat shapings especially for entrepreneurs and low-toned line of productses, slowing down their productivity as nearly as slowing down the economy. Subcontracting IT activities to a narrow vender company is indeed a win-win situation for the twain(prenominal) end, enabling the plaque to upgrade its IT performance and providing business to the vender company.Moreover, with outsourcing, organizations digest get access to variable quantity IT skills and knowledge which potentially suffer remediate their efficiency, and outsourcing wangles accommodating any new IT innovations or changes in any industry easier to handle for organizations. Needless to reference release the benefits of savings on investments in IT related infrastructure which nates be worn-out(a) towards organizations business blowup or something evenly authoritative. The benefits menti adeptd above stomach be substantial only if outsourcing is proficient arfully with trusty management. Otherwise, oversights of of the essence(predicate) issues stick out lend signifi outhouset complications to the organizations. establish on the stories of unrewarded outsourcing trusts, the close to abundant problems the organizations encounter are the lack of integrating between vender and customer, hidden cost of training, miscalculation of improvement of the marketer company, and sometimes protestentiation of the lymph node company can be compromised since the vendor company could be serving the opponent company as intimately.In call of a company outsourcing its intact IT department from a swear out provider company, go throughation of inviolable collaboration and conversation with to each one other(a) practically requires some time and application from both sides overdue to the differences of pagan, geographical and pet business practices. The fact that knowledge exile is the most important term in IT outsourcing implies the integration process of vendor and invitee companies is more realistic than physical.That is why the state problems such(prenominal)(prenominal) as different interpretations of the contract, conflicts of twain cultures and lack of preparedness for integrated exertion occur rattling often and if ignored, they could ending negative impacts on both companies. well-grounded, economic, geographical and policy-making purlieus of the solid ground in which the lymph gland company outsources its IT activities are the most important but often ignored factors. When the armament countries see civilised war or natural hap happens, the recovery be the companies encounter are ordinarily incalculable. IT outsourcing exceed practicesThrough weighting the verifying and negative impacts of outsourcing cautiously and planning the fracture process timbre by step, companies can successfully implement outsourcing to its daily business practices and convert it to one of its competitive advantages easily. Recommended scoop up practices of IT outsourcing usually direction on swell management and hefty valuement of choosing the partner. Maintaining superb communication with your supporter provider out front and after subscribe on the contract is in lik e manner an necessity part of condition up a sustainable IT solution for any company.Every company and every figure has its own singularity thusly the usefulness provider under(a)stands the comminuted requirement is necessary. And the difficulties both side face due to the cultural and geographical differences can be opinionated by committing to genuine communication. For display case leaders of both sides should support on set, reform objectives and stay pull to them when circumstances change. Although the cost reduction is the first motive of outsourcing, overdoing it can compromise the organizations core activities.In directlys globalizing world, importance of maintaining good IT performance is greater than ever to the organizations well-being so that act the lowest cost can render its own price. The causation why is that the vendor companies are also business institutions depending on their profits therefore in coif to meet the clients cost requirement they s ometimes cut corners such as hiring under qualified staffs which consequently affect the note of the client companies operation.In inn to make the integration process easier, the outsourcers should ready effort into pur astound compatible good providers. It is important to make sure that your do provider has organization cultures and preferred business practices similar to yours since they exit become a part of the organization. other essential outsourcing practice is to trust the profit providers experience and capacities to assess whether they are skilful enough to maintain your companys operation at all times.In terms of choosing their partner, organizations also should consider any anticipate afterlife changes in the market and their future expansion plans as well as their competitors IT performance level. governmental and societal environments of the countries in which the vendor companies operate, should not be out of concern. Outsourcers should always be aware of the political situation of their horde countries as well as social factors that could influence the lumber of employees job performance.It is recommended to outsourcers to hap presence of lesson on-site as a middle man so that they can pitch some salmagundi of coordination over the murder of the IT activities. Representatives also work as a communication bridge circuit between partners making sure each side examine their roles and responsibilities. sound conniptions Legal aspects of IT outsourcing might be the most tangled issues the enterprises encounter since it involves variant types of laws such as international and house servant.International park laws such as intelligent Property, Copy dutys, patent, pile Secret, Privacy and cultivation guarantor all need to be considered when a company makes an outsourcing related decision. all outsourcing contract addresses the visible and intangible issues and their ratified implications as well as procedures in orde r to cancel lack of clarity. For example price is very important aspect of IT outsourcing contract and any possible dubiousness related to the pricing of service should be stated on the contract.Inflation, delays, manpower and real shortages and insolvency all moldiness(prenominal) be implicated and put on the contract to grade when situations mentioned above happens. withal outsourcing contract should be flexible to discipline any changes in performance, quality, and suitable to legions countrys tax law, pension off laws to solve staff related matters. impalpable issues on the other hand should be carefully aspect through because they pose the highest stakes on the organizations house servant and international operation.When companies outsource their entire or partial IT function, the peril of their customers valuable knowledge such as social security numbers, medical history, reference card information to be candid gets higher as well as their own native secret in formation. A company must do risk assessment of the innkeeper countrys security environment by metre how utile the laws referred to quick-witted property, copyright, digital hacking and misdemeanour of privacy are. alas laws pertaining to privacy security system are not so effective in todays most popular IT service provider countries such as China, India and Philippine.Therefore seaward IT centers and outsourcing companies must picture virile system together to harbor themselves as well as their customers. Intellectual Property and Patent laws have strong presence in USA and European countries but they differ in forces countries. Il efficacious use of ones IT innovation such as software, source and know-how are not the front line concerns of governments of foreign countries right now, so outsourcers usually face horrible risk of their sharp property stolen and utilize against their products in the market.US companies sofdeuceod secrets are also totally qualified o n rough-cut trust and compose agreements between two parts. There is no law enforcement system in the host countries to back up such written agreements. Basically, US companies engage offshore outsourcing as an IT strategy must consider domestic and international laws extremely and craft their outsourcing contracts think on to asperse any risks they may encounter in unfamiliar legal environment. Sources http//www. infoworld. com/d/adventures-in-it/13-best-practices-it-outsourcing-034? age=0,0 http//blog. everythingcu. com/2006/02/12/the-many-downsides-of-outsourcing/ http//www. cio. com/ member/40380/Outsourcing_Definition_and_Solutions A Legal Perspective on Outsourcing and Offshoring, Sam Ramanujan Sandhya Jane journal of American honorary society of Business, Cambridge Mar 2006 8, 2 ABI/ affirm ball-shaped Outsourcing best practices Outsourcing and Offshoring The new-fangled IS Paradigm? , William R King journal of Global instruction Technology concern 2005 8, 2 ABI/I NFORM Global www. wikipedia. comInformation Technology Outsourcing cautionWhat is IT outsourcing? IT outsourcing is an arrangement in which a company subcontracts its information technology related activities to be executed by a different company. In the past several decades, as the role of information technology grew in the performance of a company, the fixed cost of maintaining up and running IT facilities and staffs was increasing as well.Therefore outsourcing solution was derived from companies need to achieve superior performance of IT functions with minimum amount of cost. Major classifications of IT functions that companies outsource are infrastructure and applications. Infrastructure outsourcing refers to a company resolving its entire IT activities handled by a contracted vendor company on the companys behalf.Application outsourcing stands for a company subcontracting only its core IT applications such as ERP systems, document management systems or Business intelligence ap plications with service provider. Benefits and Risks Although it is obvious that primary cause of increasing trend of outsourcing is a cost factor, many other benefits come along with outsourcing. Outsourcing allows companies to shift their whole attention on the quality of their core activities without facing the vulnerability of poor level of IT performance.Because no matter what industry a company is in, cost and pressure of having in-house IT solutions require the company to be an expert in IT industry which is difficult to achieve for any size organizations especially for entrepreneurs and small businesses, slowing down their productivity as well as slowing down the economy. Subcontracting IT activities to a specialized vendor company is indeed a win-win situation for the both end, enabling the organization to upgrade its IT performance and providing business to the vendor company.Moreover, with outsourcing, organizations can get access to variable IT skills and knowledge which potentially can improve their efficiency, and outsourcing makes accommodating any new IT innovations or changes in any industry easier to handle for organizations. Needless to mention the benefits of savings on investments in IT related infrastructure which can be spent towards organizations business expansion or something equally important. The benefits mentioned above can be substantial only if outsourcing is practiced arefully with good management. Otherwise, oversights of important issues can bring significant complications to the organizations. Based on the stories of unsuccessful outsourcing practices, the most considerable problems the organizations encounter are the lack of integration between vendor and client, hidden costs of training, miscalculation of proficiency of the vendor company, and sometimes differentiation of the client company can be compromised since the vendor company could be serving the competitor company as well.In terms of a company outsourcing its entir e IT department from a service provider company, implementation of good collaboration and communication with each other often requires some time and patience from both sides due to the differences of cultural, geographical and preferred business practices. The fact that knowledge transfer is the most important term in IT outsourcing implies the integration process of vendor and client companies is more virtual than physical.That is why the people problems such as different interpretations of the contract, conflicts of two cultures and lack of preparation for integrated operation occur very often and if ignored, they could result negative impacts on both companies. Legal, economic, geographical and political environments of the country in which the client company outsources its IT activities are the most important but often ignored factors. When the host countries face civil war or natural disaster happens, the recovery costs the companies encounter are usually incalculable. IT outso urcing best practicesThrough weighting the positive and negative impacts of outsourcing carefully and planning the shifting process step by step, companies can successfully implement outsourcing to its daily business practices and convert it to one of its competitive advantages easily. Recommended best practices of IT outsourcing usually focus on good management and good assessment of choosing the partner. Maintaining good communication with your service provider before and after signing on the contract is also an essential part of setting up a sustainable IT solution for any company.Every company and every project has its own uniqueness therefore the service provider understands the detailed requirement is necessary. And the difficulties both side face due to the cultural and geographical differences can be resolved by committing to good communication. For example leaders of both sides should agree on set, clear objectives and stay committed to them when circumstances change. Altho ugh the cost reduction is the primary motive of outsourcing, overdoing it can compromise the organizations core activities.In todays globalizing world, importance of maintaining good IT performance is greater than ever to the organizations wellbeing so that pursuing the lowest cost can have its own price. The reason why is that the vendor companies are also business institutions depending on their profits therefore in order to meet the clients cost requirement they sometimes cut corners such as hiring under qualified staffs which consequently affect the quality of the client companies operation.In order to make the integration process easier, the outsourcers should put effort into finding compatible service providers. It is important to make sure that your service provider has organization cultures and preferred business practices similar to yours since they will become a part of the organization. Another essential outsourcing practice is to consider the service providers experience and capacities to assess whether they are skilled enough to maintain your companys operation at all times.In terms of choosing their partner, organizations also should consider any expected future changes in the market and their future expansion plans as well as their competitors IT performance level. Political and social environments of the countries in which the vendor companies operate, should not be out of concern. Outsourcers should always be aware of the political situation of their host countries as well as social factors that could influence the quality of employees job performance.It is recommended to outsourcers to keep presence of representative on-site as a middle man so that they can have some kind of coordination over the execution of the IT activities. Representatives also work as a communication bridge between partners making sure each side understand their roles and responsibilities. Legal aspects Legal aspects of IT outsourcing might be the most complicated issues the enterprises encounter since it involves various types of laws such as international and domestic.International common laws such as Intellectual Property, Copyrights, Patent, Trade Secret, Privacy and Information security all need to be considered when a company makes an outsourcing related decision. Any outsourcing contract addresses the tangible and intangible issues and their legal implications as well as procedures in order to avoid lack of clarity. For example pricing is very important aspect of IT outsourcing contract and any possible uncertainty related to the pricing of service should be stated on the contract.Inflation, delays, manpower and material shortages and insolvency all must be concerned and put on the contract to regulate when situations mentioned above happens. Also outsourcing contract should be flexible to adjust any changes in performance, quality, and suitable to host countrys tax law, pension laws to solve staff related matters. Intangible issues on the o ther hand should be carefully thought through because they pose the highest risks on the organizations domestic and international operation.When companies outsource their entire or partial IT function, the risk of their customers valuable information such as social security numbers, medical history, credit card information to be exposed gets higher as well as their own internal secret information. A company must do risk assessment of the host countrys security environment by measuring how effective the laws referred to intellectual property, copyright, digital hacking and violation of privacy are. Unfortunately laws pertaining to privacy protection are not so effective in todays most popular IT service provider countries such as China, India and Philippine.Therefore offshore IT centers and outsourcing companies must establish strong system together to protect themselves as well as their customers. Intellectual Property and Patent laws have strong presence in USA and European countri es but they differ in host countries. Illegal use of ones IT innovation such as software, source and know-how are not the front line concerns of governments of foreign countries right now, so outsourcers usually face tremendous risk of their intellectual property stolen and used against their products in the market.US companies trade secrets are also totally dependent on mutual trust and written agreements between two parts. There is no law enforcement system in the host countries to back up such written agreements. Basically, US companies pursuing offshore outsourcing as an IT strategy must consider domestic and international laws extremely and craft their outsourcing contracts focused on to minimize any risks they may encounter in unfamiliar legal environment. Sources http//www. infoworld. com/d/adventures-in-it/13-best-practices-it-outsourcing-034? age=0,0 http//blog. everythingcu. com/2006/02/12/the-many-downsides-of-outsourcing/ http//www. cio. com/article/40380/Outsourcing_Def inition_and_Solutions A Legal Perspective on Outsourcing and Offshoring, Sam Ramanujan Sandhya Jane Journal of American Academy of Business, Cambridge Mar 2006 8, 2 ABI/INFORM Global Outsourcing best practices Outsourcing and Offshoring The New IS Paradigm? , William R King Journal of Global Information Technology Management 2005 8, 2 ABI/INFORM Global www. wikipedia. com