Information Outsourcing: Outsourcing Definition & Human Resources OutsourcingInformation Outsourcing
Definition and Scope
The management and operation of part of an organization IT services by an external service at the agreed service levels to an agreed cost formula over an agreed period.
Variants of outsourcing
i.Body shop: Use of contract/temporary staff to assist with specific tasks e.g computer programmer or data entry clerks.
ii.Project Management: Use of outsiders e.g. management consultants to assist in the management of a specific project.
iii.Full scale outsourcing: A significant part of the IS/IT function is given/taken over by outsiders. This is the current view of outsourcing.
Typical scenarios: those which tend to be outsourced.
i.Management of telecommunications/Network infrastructure
ii.Management/operation of the computer center, this covers the custody of hardware and running of the application systems.
iii.System development.
The deal may also entail shifting of physical resources from one location to another, it can also involve taking over/inheriting the clients IT staff. Most outsourcing deals tend to take a fairly lengthy period, usually 4-10 years.
Origins/motives of outsourcing
a)The general philosophy behind outsourcing usually is “let us outsource that which we are not good at and concentrate on our core business”. This is the core competency argument which has been popularized by management experts (gurus) in the last decade.
b)Reaction to efficiency Imperative i.e. desire to be more efficient, both in terms of cost and service delivery. Outsourcers on the other hand promise the client guaranteed service levels cost containment.
c)The need to acquire resources, the third reason often cited for outsourcing is to acquire new resources such as machine upgrades, additional personnel or even money. An outsourcing deal may enable a client to acquire such resources in 2 ways;
i.The outsourcer may promise to provide the additional resources at a lower cost.
ii.The outsourcer may acquire these resources for the 1st time.
d)Declining values of IT in the eyes of management, with increased expenditure on information system and technology, some managers have come to feel that such expenditure does not generate adequate returns. Its' value to the enterprise appears questionable and hence the inclination to hand it over to an outsourcer. IT seems to have no strategic value to such managers.
Author : Tony
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