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IT, Outsourcing, and Strategy

Strategic choices should provide flexibility to deal with new scenarios with vigor and strength. The financial services sector has to use outsourcing in a way which provides sustenance in the dynamic and fluid atmosphere of this industry (Fincham, 1995). Some of the major changes with which JPM must contend relate to new entrants, deregulation, and regional variations in economic development. JPM has to diversify its broad portfolio of enterprises even further, and prepare to compete against more capable adversaries.

The company cannot adopt a conservative or an unproductive stance as it navigates the turbulence of its key markets. The IT know-how which its new CIO brings in is probably dated already. Geographic Information Systems (GIS) and voice over ATMs are just passing examples of the major new technologies available for financial services (Keyes, 2000). Virus protection is a key and highly specialized concern. The merger with a retail bank may produce no benefits if its existing customer base cannot be served with the latest and best products and services.

IBM, on the other hand, is in an unassailable position when it comes to matching the latest in computing technology with new business opportunities that JPM can spot. The potential benefits of close and binding collaboration between JPM and IBM are as awesome, as their separation may prove to be beneficial for smaller and newer banking, insurance, and securities companies. Financial services are expected to outsource IT as the construction industry does for general contractors (Schniederjans & Schniederjans, 2007).

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Just as the best firms in realty benefit from alliances with reliable and top quality contractors, so JPM’s future success may also depend upon its facility with cutting-edge options for IT deployment in the service of its customers. Even if JPM would like to invest in its own IT capability as a means of competition, against the accumulated expert opinions on the matter, it has to do so in a manner consistent with its commitment to human resources. An organization of this size and stature should know that behavior cannot be changed by issuing instructions (Morrison and Taylor, 1999): people have to understand the logic of changes.

We glean from the case that large numbers of employees and ex-employees transferred to IBM are disgruntled: this does not reflect well on JPM’s execution of its own stated business policies (A leader in global financial services, 2007). The optimal relationships between financial services, IT, and outsourcing should be based on stable, long-term alliances between like-minded organizations, with each partner working in cohesion for mutual benefits. Active cooperation between employees at all levels of organization is vital for success.

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