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Outsourcing & Management

Outsourcing offers various benefits to the vendor as well as to the management. A typical IS outsourcing vendor usually enjoys power over the company’s IS procedures and priorities. He takes the control and it’s the employees and management that have to adapt to the procedures. A vendor may use any technology he prefers. He has control over strategies and a priority as well because he is the one managing the complete IS of the company. Management can also reap a plethora of benefits by choosing outsourcing.

Some major benefits include time and cost savings. Management time can be saved considerably and can be utilized for other priorities, as in business time is money. Risks are minimized as management just bothers about the end result and procedures and other details. Costs savings are also considerable as any changes are absorbed by the vendor without the management putting in efforts to adapt according to them. 2. This charge is usually true in the case of the employees working for the outsource vendor.

The primary reason for this is that the employees have no direct relation and expectations from the management of the client. They expect incentives and benefits from their employer, that is the

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outsource vendor. It is up to the vendor to create such incentive programs and culture within the organization so that employees become more and more client focused. 3. I do not agree with this statement. It is necessarily bad. Outsourcing has often been termed as “fool’s gold” too. There are many reasons that justify this tag.

Firstly, if that function is so important then it must be managed by the organization’s own employees. Power, control and intellectual secrets also gets transferred to the outsource vendor along with the job. It can be a threat to the business. The priorities are set by the vendor and management has no control over them. It is often expensive and risky to switch vendors. So in light of these arguments, I do not agree with this statement. 4. This is especially possible with specialization.

Take for example payroll management outsourcing vendor. He may manage the payrolls of 15 different companies. With every new client adding to his list, his cost per client decreases but his earnings from the clients remain the same, this way he reaps economies of scale that single company may not. 5. Outsourcing IS is similar to outsourcing cafeteria in various ways. The company gets a specialist to manage the IS. The management can free their time and other priorities can be taken to.

Just like a cafeteria is not a company’s priority, by outsourcing the IS a company can focus on its main business and not on a support like IS. Moreover, all the tasks and procedures are to be taken care of by the vendor only. It is a bit different as well because unlike cafeteria, a company cannot function without proper IS. Also, a lot of trade secrets and intellectual property also has to be given to the vendor along with control and power over the systems. Infrastructure outsourcing is basically fool’s gold. It must be done by the company itself not by some third party vendor.

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