ITM OUTSOURCING

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Table of Contents

Introduction........................................................................................................................................3

Problem Statement.............................................................................................................................4

Strategic Project Management...........................................................................................................4

System Analysis and Design..............................................................................................................10

System and Network.........................................................................................................................13

IT Security.........................................................................................................................................14

Definitions........................................................................................................................................17

Outsourcing:.....................................................................................................................................17

Knowledge Process Outsourcing:......................................................................................................19

Recruitment Process Outsourcing (RPO):.........................................................................................20

In Sourcing:.......................................................................................................................................21

Strategic Management:....................................................................................................................21

Offshore Outsourcing:......................................................................................................................21

Near Shoring:....................................................................................................................................22

Information Technology Management ............................................................................................23

Impacts of Outsourcing.....................................................................................................................24

Supply Chain Management...............................................................................................................26

Supply Chain Technology..................................................................................................................27

Impacts for IT Companies.................................................................................................................31

Conclusion........................................................................................................................................32

References........................................................................................................................................34

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Introduction

It is a fact that technology has not only changed the way of thinking but has also changed the

way of working and living of the people. The world in which we live is run by the technology

which is a wide area that includes processes such as computer software, computer hardware,

information systems, data constructs and programming languages. There are varieties of

functions which IT professionals have to perform that range from installing applications to

designing complex database.

Sometimes, it becomes difficult for a business to perform all the functions by itself and if a

company realized that it does not have sufficient resources to accomplish those tasks then it

makes contact with others companies to accomplish the work and take services of any other

organization through outsourcing. Cost reductions, improved operational efficiency, abundance

of skill manpower, global best practices are some other drivers for outsourcing (Jenyns, 2011).

Purpose

This study is also intended to explore the fundamental motives behind this increasing trend of

US and Western organizations in sub-letting the business functions to off shore countries like

India and China. It will also help to figure out the reasonably explained suggestions for viable

managerial decisions related to IT management.

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Problem Statement

Outsourcing has become a hot topic for debate recently, especially in the developed countries.

Its boom is seen in the press during the recent global economic crisis. Voices in favor and it are

heard and raised from common public to the high valued decisions makers and politicians of the

society. Some say it’s a savior in these hard times for their companies and some argue it to be a

job-killing process, initiated by the management. Outsourcing has now become a common

practice because it gives countless advantages to parties, both hiring and the hired. This paper

shall shed light on various advantages disadvantages, implications and impacts of outsourcing

on the IT industry in the world, especially for the U.S.

Strategic Project Management

Through our research, we have arrived at the conclusion that in undertaking our outsourcing

process, it will entail a very vigorous exercise in project management. Some of the key aspects

of this will include the following:

The specification requirements will need to be very clearly reviewed. Chances of these

requirements being misunderstood are quite high when a project is being outsourced. It would

perhaps be wise to inculcate these into the contract. A comprehensive requirements statement

will also enable us to guesstimate the amount of work involved with the project, and to compare

whether the vendor’s own projection for the same is plausible or not.

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It would also be imperative to do a thorough cost-benefit analysis for the outsourcing project. If

the merits of outsourcing aren’t substantial enough, we may consider reversing our decision

altogether. We will be sure to ascertain that all the relevant stake holders understand our

decision and the factors that can cause it, including invisibility of operations, knowledge drain,

and proprietary information being leaked outside our company.

ITM is the perpective of strategic mananagemt , all resoures and parameter of organizational

value chain are to be aligned, with emphasis on managing the information systems to facilitate

th management of its decision making, based on the relevant management if ots information

systm. To enable this a comprehensive ‘Management of informatuin system (MIS) plays the

crucial part in collecting, organizing, filtering and dissemination of tailored (to specific needs)

of the management is provided, which in turn assist in producing performance reports in

‘concise’ form to guage the ongoing strategic health of the organization. And, to make accurate

changes its process, planning, modifying to revisit the organization’s deciosns making process

and upgrading where neceaasy.

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In context of strategic management the role of IT is very crucial in producing ‘Balance Score

Cards(BSC), stategy canvas and business modeling and keep up with the constant change in

‘Delta’, the rate of change in yhe external environment, and makes its simpler to induct relevant

changes in oits processes in the right direction.

The main focus of use of IT is to create value generation through the use of information

technology ,with an intent of using it as a strong viable source in the strategic process. The It

infrastructure has to be higly integerative to be able create ‘synergy’ across the board of the

organzational value chain as a team effort, to be useful.

The management needs to design, use its IT strength to build a collaborative, integrated and

focused infracture which is more customer and product centric and get in involved in

establishing relationships in terms of its both internal and external enviromnents., with a

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network of servers, storage of data, security network and its application management with

agility, accuracy nas timeliness.

We will also post a request for proposal or an RFP for our project. This will consist of all the

details of our needs, management methods, etc. If necessary, we will employ an external

consultant to secure the best outsourcing deal for us. The consultant may also be able to aid us in

selecting the appropriate vendor, making sure that we have written a thorough request for

proposal, and appraise any perspective vendor as well.

An experienced, trustworthy manager will be assigned to oversee the execution of the entire IT

outsourcing project. Our research has indicated to us that outsourcing demands an intricate set of

management skills, and we will be very selective in who is chosen to be the manager for this

project. Amongst the criteria for this selection will be the manager’s ability to appreciate

cultural difference in working styles and communication.

Very strong lines of communication and communication will be established with the party that

we choose to outsource our project to. It will be enough to just review matters and take

decisions at periodic meetings, or through perusing documents.

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We will need to be wary of vendors who bid at comparatively lower rates that what we expect.

This could mean that they have either not grasped our requirements well enough, or are not

giving much importance to our project. Concurrently, we will also ask for references from our

vendors and also consider whether they have had long-term clients in the past.

We will ask of our chosen vendor to provide a comprehensive project plan that encompasses all

aspects of the project. Subsequently we will use Key Performance Indicators (KPI’s) to monitor

the vendor’s performance and analyze it with the Key Success Factors of the industry similar to

our design and structure. The importance of value relevancy is the key, when comparing and

assessing the potential to the short listed vendor’s capacity to produce and provide ‘requirement

specific model’ tailored to our exclusive needs. A framework will be asked as plan will be

sought from the vendor.

A comprehensive timeline and task design, execution, according to the established timeline will

come under the ‘compliance’ clause of the proposal.

We will approach this initiative through creating a ‘Matrix’ first to enable us the clarity needed,

to what do we want, how we want and expectations from outsourcing and selecting the vendor.

Strategic enterprise architecture must have the requisites for turning around the

project parameters to meet strategic intents

How would it change our prevailing set of processes

How we and the outsourcing medium will help in induction of exclusive Information

technology, and risks involved.

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This would help us in defining what particular nomenclature will suit us to be inducted and

executed in our structural design with minimum risk and cost-value effective at the same time in

the long run.

An important aspect to consider will be the transmission of knowledge to the vendor, and the

time that this will consume. Additionally, we will also consider how our project may be

impacted owing to a high rate of employee turnover at the vendor’s end.

It wouldn’t be realistic on our part to expect cost efficiencies in the short run. There may be

several related costs (travel etc) that will be incurred while the project is completely established

as an outsourced venture.

We will retain the original intellectual property rights and also conduct a full assessment, as

discussed above of the vendor before signing off on the outsourcing project contract.

Particularly, when any business decides to employ outsourcing project management services,

that particular business must take services from a reliable advisor who can focus clearly on the

bottom line. It must always be remembered that Return on Investment (ROI) is very important,

and the same is the case with outsourcing projects. Hence, before initiating any project, it is

always suggested to properly plan and make a rough sketch of the resources required. “We field

a lot of questions about cost management and project management but sometimes it’s not easy

to calculate ROI or to do it precisely. Companies want to know ROI even if it’s calculated under

a rough-case scenario.”

The vendor will be hired to design and implement the system and will be responsible to show

the figures of improvement in the inducted processes and the cost benefit bench marks which

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were agreed upon. Any marked deviations from the outcomes, the vendor will compensate on

free cost and time from his own resources or according to the mutually agreed clauses made

during signing of the contract.

System Analysis and Design

IT is an ever expanding and developing industry for almost the last two decades. It has its own

limitations and implications. In this industry, the outsourcing process exists with all of its

complexities. It offers its advantages like the cost saving , better management of the available

resources, improved quality of services, access and induction of proven intellectual, access to

the well trained talents, risk mitigation and most importantly the ‘evidence based’ expertise. On

the other hand, it has its disadvantages too, like the loss of managerial control, security issues,

resistance from the local communities and sometimes quality problems.

This paper shall shed light on various advantages, disadvantages, implications and impacts of

outsourcing on the IT industry in the world especially in the U.S. The situation at present, its

loopholes and positives shall be a part of this paper. After analyzing all the aspects of this issue /

phenomenon, recommendations shall be given so as to best utilize the services of the officials in

the best interest of the institution at the same time.

As we conducted our research for outsourcing the IT project, we realized that we simply could

not underestimate the significance of system analysis and design. In this day and age of when

information is so widely available, all business organizations requires IT based solutions and

systems it to function effectively and sustain growth.

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System Analysis and design is the method of designing information systems that make leverage

the tools of information technology to provide support to the goals and objectives of an

organization. There is usually a systems analyst whose function it is to work alongside the

managers of the organizational value chain. There is a significant team work involved in system

analysis, and this team comprises skilled people from both the IT as well as other departments

who are relevant to organizational performance invariably.

The vendor-organization interface would be developed to work with the different

workers/managers on the issues of problem solving through creating and implementing cross

organizational collaborative efforts to bind the vendor’s expertise with the organizational human

capital. Cross collaboration is extremely important in order to decrease resistant level of the

organizational workforce involved in this exercise, add clarity, interest and urgency to adapt

while designing and implementing the system alongside the outsourced experts.

It makes the whole exercise as the most viable learning tool as training & development, and also

inculcate and develop in-house human minds with enough insights in developing newer system

‘in house’ for future needs of the organization, generating a workable and strategic value to the

organization’s future requirements.

The business can eventually develop and increase its own in-house project management

competency with skillful outsourcing. If the development lies inside developed and acquired

core competencies, then you can outsource only the more diverse technological aspect to project

management as per new requirements.

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Our team of system analysts will concentrate on providing complete solutions that meet the

client’s needs adequately and effectively as possible. Considerable emphasis will be laid on the

significance of planning, analyzing, and developing solutions while the project infrastructure is

being procured and laid out. At first, it would be critical to conduct a client needs analysis,

following which, data will be gathered and analyzed to gauge the present day business set up as

well as the way our resources are deployed. In developing solutions, a process map and blue

print will be designed, based on the findings of the above exercises. The objective here would be

to identify any possible bottle necks or issues that could arise in the future with our outsourcing

project.

Once the finalized decision is made for moving and handing over to outsource project

management, it is essential to remain cautious regarding in-house project managers and properly

ensure that the suitable internal links are recognized early with the external consultant leading

the effort. There is always a heavy amount of leveraging possible which can be achieved if

planned and executed properly. A bridge or link between the outside provider and within the

project guides the company in its own project management competency and also augments other

competencies.

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System and Network

Here is another area which we have to consider with a great deal of thought, foresight, and

intelligence. Employing the right people in the area of IT can be a daunting task. There are at

least three important aspects that we will need to heed carefully.

There will need to have experienced director of IT, who should have requisite

knowledge of information technology to be compensated well for the performing the

tasks that are assigned to him. Similarly, the systems administrator or technical support

staff will need to be assigned challenging tasks with more financial and motivational

rewards, otherwise we may risk losing people with company secrets and also a human

capital waste.

The IT personnel will also need to be managed properly. Good system administrators are

often averse to looking after end-user technical support issues, while the end-user

technical support staff often want to dabble into server maintenance and work with other,

more sophisticated technology, but they are not knowledgeable enough to be allowed to

do so.

System administrators and other IT staff are either overly occupied with work, or at

times, simply have nothing more to do than just be there to address any IT issues that

may arise. The organization nevertheless ends up paying them a consistent salary. In

order to reconcile the risk of IT personnel turn over as well as the cost of keeping them,

we will have to do some very careful financial planning.

The IT infrasture has to be adopted which has the potential to provide our organization;

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Lower IT cost structure

Improve IT services relative to the best practice of ITM

Upgraded and continuous improvement centic and concentric

High deliverable standards for productivity improvement

High quality deliverables with respect to ‘out sourcing’- third party

arrangements, most likely associated with ‘BS 15000 / ITIL standards. Also

see. BSI Group, and (Information Technology Infrastructure Library)

IT Security

In order to ensure absolute security with outsourcing our IT project, we will take the following

main measures:

Establish a solid security policy

We will make sure primarily that our own business is in order, and that its security policy is

strong and stringent based on modern security tools and methods and must to change

periodically, including the key staff members and which excellent. The hardware and security

software and allied equipment be based on excellent portability functions to interface other

equipment and apt for further up gradation periodically.. There will be a data categorization that

will separate the more sensitive data from the more routine information. As well, there will be

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standards and criteria in place that will be established with the consent of all the stakeholders,

managers, and employees of our organization.

Choose The Right Outsourcing Vendor

This will be a critical step in order for us to ensure that our chosen vendor strictly adheres to our

stipulated security policy. We will also require of our vendor to have security rules and

regulations established in his own company, in order to make sure that our data is well

protected.

Te organization should opt for vendors for outsourcing with who has the capacity to work under

the principles and domain of ‘Infirmation-Technology and Research Advisory Services and

Management. (ITSM). There are large number of registered vendors who operates in this

domain. Making the choice, it is advisable to verify using the’ PinkVerify Tool set, version 3.1

or V- 2011 certication and authentication of the products, which meets the comatiability criteria

if ITIL, pertaining to its overall and core suitability and integrative sustainability requirements.

Establish A Strong Privacy And Intellectual Policy

We will be very clear with our vendor about this policy in order to avoid the risk of any

misunderstanding arising at a late stage, by clearly defining our system’s requirement’s

accessibility policy, rules and regulations. The intellectual information and data privacy and

protection is a serious issue, especially where outsourcing and off sourcing takes place.

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The organization’s data may be very confidential, may have business growth secrets and other

discreet nature of the information. The World Intellectual Property Organization ( WIPO),

strongly suggests that before getting into a contract of such nature, a thorough and exhaustive

audit and investigative process should take pace relating to ‘IP due diligence along with its

attached risk evaluation.

It will help the institution to assess in taking its decision on which information and sources of

data should be kept in house and what to outsource? For this process a critical in house review

should take place. It needs to define and explore parameters of ‘Due Diligence of IP, and then

decide on the best courses of actions. This is a ‘loop’ step’, towards vendor selection as

discussed above at the same time in relative terms.

Data protection

Before we outsource our IT project, we will start using databases to invigilate gateways and

application layer firewalls in order to establish the policies with regards to their usage. These

devices can also avert any abuse and exploitation of our data and intellectual policy.

Other measures to ensure that our privacy policy is strictly abided by will include educating

personnel on data management, establishing the rule of minimal privilege, to access data by a

single authority, developing a method to ensure leak-proof traffic, and making sure that

application and network security audits are conducted on a regular basis.

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Definitions

Some of the important terminologies are briefly defined here.

Outsourcing:

It is a process of contracting to a third-party or external provider for some business function or

services. Outsourcing or sub-servicing often refers to the process of contracting to a third-party a

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specific job/s which may not be feasible to do in house or where there is lack of expertise is

lacking to perform such tasks. Also, it is done to save costs by giving a portion of the project to

a party to have better expertise in economies of scales as its strength.

In Information technology this trend is becoming popular with passage of time by sub letting the

components of job to different experts in their own field, which enables additional manpower

hiring with added cost and more time spent on the project as a whole. It can be in the shape of

large contracts covering many aspects of particular job, or even a full job to another company or

even small information management and retrieval such surveys, emails, social media and blogs.

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Knowledge Process Outsourcing:

In this form of outsourcing, knowledge and information-related work is done by third-party

workers who are highly skilled and trained in their field. It is also called KPO, where crucial

business or process information has a core value to the entire value chain of the organization.

And, it has critical importance for the organization success.

Where there is a dire need of specialized, highly analytical skill based experts can only perform

such activities. It becomes imperative for the organization to outsource critical task to such

professionals. Such practice can become to gain competitive advantage through such highly

skilled and knowledge based professional’s comparative advantage of their expertise.

Since this exercise is expensive, therefore, certain degree of risk is also attached with it, in case

of failure to achieve desired results. Not, only the heavy amount will be lost, but it will create

tremendous loss and destructions to the entire organizational value chain, and may lead to a

collapse.

Therefore, getting into it, a thorough instigative process and methodology be designed and

strictly followed before KPO decision making. Following diagram sows an example of design

structure and flow of the intended outcome which has a low probability of systematic risk

occurrence.

The people in charge should have an adequate knowledge behind the mechanics of KPO process

and intellectually equipped to make in-depth scrutiny of adopting KPO and overseeing it by

developing a real time monitoring and 360 feedback system for effective control, along withᵒ

personal involvement.

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Recruitment Process Outsourcing (RPO):

It is a form of outsourcing in which a company or organizations assigns all or some part of its

recruitment activities to an external service provider. In this case, the RPO acts as seeker,

recruiter and provider through entire recruitment and creating the job profiles, including

technology based staffing and reporting.

RPO enacts and enables organization’s the quality of hired staff, saves times to add value by

selecting the most suitable talent pool through rigorous and comprehensive investigative tools,

including ‘Raters Model’ based on quantitative and qualitative metrics with stringent

compliance criteria.

by Carlos Sanchez Ivy business journal

Strategy | May / June 2010

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In Sourcing:

It is the process of allocating tasks or jobs to an internal entity that is dedicated for that function

and operation, in a manner that its value should supplement other tasks jobs and related

objectives. It is relatively a new concept, and it emphasizes its conceptual design, as it pertains

to using in house experts and specialists to fill in gaps in the current needs of the organization to

perform certain tasks on temporary basis, before any other permanent arrangements becomes

necessary.

Strategic Management:

Strategic means ‘long term’, and strategic management is set of leadership (including Board of

Governors) intent starting from the organizational vision, mission, and set of processes aligned

together to achieve instructional goals. The processes is designed to evolve a workable structure

which is capable of functioning as a cohesive unit of inter-organizational ‘softer and harder’

competencies and capacity to formulate goal plans, planning, formulating action plans into set of

interlinked change adaptive objectives to form a ‘strategy’. Implementation of strategy with

effective system control systems to attain its goals.

Offshore Outsourcing:

It is the practice of assigning some business functions of organizational value chain to an

external organization that is located in a country other than the country of the outsourcing

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organization, with an objective of transfer of technology at a lesser cost to gain comparative

advantage and improve cost-efficiency ratio. This is usually done by hiring the services from

another firm’s expertise from another country to supplement the hiring company’s business

operations.

With the advent of internet, it has become easier to hire the services of individuals as freelancers

to provide the skills and expertise from all over the world. It reduces the cost o operations and

also develops a large data base source for the organization. It has a tremendous value of having

large labor at considerable lower costs, irrespective to the size and functions of the company¹.

This type of planning model is also known as’ Remote In-Sourcing’, which help companies to

seek and acquire required resources which are available in different geographical environments.

This helps creating in house specific indentified by workforce working for the client in

collaboration with the client’s chosen workers, which creates an atmosphere of ‘on job

consultancy and training environment’.

Near Shoring:

It is the practice of outsourcing some business function to nearby country often that shares the

border with country of the outsourcing organization in case it has the required technology,

expertise and manpower with a lower cost structure.

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However, this concept is based on placements of business operations near to the locations where

suppliers and small manufactures are located with adequate technology to manufacture specific

components which the organization does not want to expand its manufacturing facilities.

Near shoring trend is on the increase in recent times, as more and more organizations has started

to increase their production and manufacturing in U.S, relying lesser on foreign producers, The

prime examples are GM, caterpillar, Apple ad Ford. Main assessment parameters to evaluate in

this scenario are the ‘type of delivery needs, like agility, which is customer centric and

switching costs pertaining to technology, fuel, quality in contrast to organization’s own cost-

benefit ratio in correlations with cost differentials

Organizations tends to locate some their operations where the end users are close by and also

have better logistics and distribution system to cover the nearby markets. The main objective is

to save supply chain and logistic costs².

Information Technology Management

It is a process of managing IT resources like hardware, software, data, networks and the staff

related to an organization in conjunction with the established organization’s priorities for the

better utilization and betterment of the concerned organization.

The objective behind ITM is the generation of different set of values needed for the formulation

and execution of organization’s action plans and strategies. ITM to be successful, it needs a

perfect and harmonized alignment with organizational planning, strategy formulation, execution

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and control systems. The quality of ITM has a direct bearing n the system dynamics of the

organization. In designing ITM methodologies, the models based of ‘system thinking’ should

be mostly used.

Impacts of Outsourcing

There are many reasons, due to which an IT company would opt for outsourcing. Both the

hiring and the hired countries benefit from it. The company hired earns money while the hiring

company gets the work done in much less cost. Thus, many think that it is a win-win process.

Outsourcing does help to reduce the burden and the huge stack of work on any company. Now,

the company can give some IT work to another company and thus can focus more productively

on the other core issues (wisegeek, 2011).

Outsourcing has made available to the companies a world-wide pool of professionals and

experts of IT. They now can choose the one with most skills and lowest costs. In such

competition bargaining is also not a big problem. Professionals lower their demanded costs

to get the job. For example, DuPont is an American IT based company that was able to

complete the project within deadline, only because it had outsourced with China. It also saved a

lot of cost on the 24 hour application, for DuPont. Thus, outsourcing has positively impacted the

IT industry because when companies manage to get work done at lower cost, the chances

increases that most of the people will be able to afford IT products due to their reasonable cost.

The trend of outsourcing has increased in the U.S. because the IT talent is depleting there. So

there is a bad need for IT related skills in the U.S. for which the companies have to hire

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other companies to get the quality work done related to Information Technology (Jenyns,

2011).

There are also some gaps which have been created in the IT industry due to outsourcing.

However, there are some proponents of outsourcing. An Increase in outsourcing in the IT

department is results in frustration in for those who do not have requisite competencies t

remain employed. Episodes where unions have also formed against this model, strikes and

riots have also resulted to reduce this practice because the workforce saw it as a threat.

They feel that their country is no more loyal to them or else they would not have to reach

out to hire people for the work. The country gets dependent on some other country to get

the task performed. The new and talented IT people of their own country are not given a

chance to be innovative or creative either. This is a big handicap for the IT graduates or

with adequate knowhow. IT problems are usually generic and there may be a new answer

to every next query (Doerken, 2005).

The trade balances of the countries also get affected by outsourcing, due to the economical,

political and social negative impacts. President Barack Obama is totally against

outsourcing and has tried many times to put an end to it in the U.S. On Sept 10, 2010 he

started a campaign and announced that he would be giving tax compensations to only

those companies who will provide jobs to U.S. citizens. He said that, “All firms that would

innovate in the US would get tax breaks”. He also told that outsourcing is the reason for

unemployment and economic recession in the country (Times of India, 2010). This clearly

shows how harmful outsourcing has been to USA when extensively used.

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Supply Chain Management

With the tremendous surge in outsourcing, a large amount of functions are deployed with

external, third party organizations. This is perceived as a strategic method to synchronize the

supply chain with the company’s growth path, as well as a smart way to contain service delivery

and other costs.

Outsourcing projects to overseas companies has gained particularly in prominence. Supply chain

management has thus developed as a global operation. We are well aware that offshore

outsourcing is a very competitive need for our organization. Accordingly, it is imperative for us

to be successful that we manage the extended supply chain meticulously. This would take into

account time and distance, the demands and methodologies of our vendor, and managing the

supply chain with regards to various other costs, transparency, co-ordination, communication,

integration, and flexibility.

In order to appropriately manage our outsourced project, we will have to consider availing the

services of outsourced logistics providers. This may serve to our completely transform our

supply chain, but on a positive note, this may also result in a more efficient usage of time and

inventory. Alternatively, we may concentrate on the transportation of our project as the only

requirement. The bottom line is that supply chain management will become a distinct area of

management, which is the backbone of production and delivery process and most crucial factor

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(if done with innovation) in creating financial leverage between one organization and others in

the industry. And, that leverage provides the biggest competitive advantage to the organization.

It has to will to be very carefully re-assed and revamped qualitatively to ensure that the way it

operates to reduce cost and add value to the end product, up to its delivery to the end user. This

is a point of creating value advantage which can be spread across the board at all functions of

the organization’s intent and organization-customer value proposition.

Supply Chain Technology

It is a fact that technology has not only changed the way of thinking but has also changed the

way of people’s working and living. The world in which we live is run by the technology which

is a wide area including processes such as computer software, computer hardware, information

systems, data constructs and programming languages. There are varieties of functions which IT

professionals have to perform that ranges from installing applications to designing complex

database.

The use of ITM is very crucial in management of supply operations and fuctions, and we need to

have spscific design and structure which can add value in Cost-Value tradeoffs and lean

processes.

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It needs to be done primarairly though;

Better planning to find out the best available concentration of sources of information on

aggregate basis

Source relative to the core needs of processes in relation to its products needed design

Create methodogies and chosing production sites and locations.

Delivery of logistical channels, stock control, inventory and product deployment system.

Return of items, creating methodologies and suitable locations.

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The IT system will provide us real time analysis of comparisions of such supply chain

parameters, interal vs the the external practices, outcomes, and generate reliable information to

make timely amendments in our supply chain matrix. The system will run on producing

advantages and comparative values-leverage through;

• Agility

• Responsive quality

• Asset Costs

• Relibilty

• Forecasting capacity

• Processes evalution and review resultants.

• Reducing distribution cost, time and enhancing logistics productivity.

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Other than outsourcing, another way for IT industry to substitute a service from any foreign

source is off shoring. It can either be production off shoring or service off shoring. Furthermore,

companies also opt for out tasking approach to drive down information technology cost which

allows the business to turn over a specific IT operation to another organization, instead of entire

IT function in contrast to outsourcing.

Only the supply chain processes which are or cannot be cost-time-value efficient in most cases

should need to be out sourced. Global evidence shows that inefficient supply chain costs

incurred can be between 50 to 70 percent f the total processes, and using expert systems

including IT based system can cut 25 to 35 percent of these cost, which can be added to the

products value and pass it in to the customers. The end value can be seen between the

manufacturing process and what cost the end user is willing to pay for its purchase as a

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‘transaction cost’? The efficacy of this multidirectional relationship between two or entities must

have common economic parameters with interdependent investments and coordinated interests

to be successful (Harold Malmgren (1961). At present time it has become an international

standard to adapt to this concept. Globalization has done much for such concepts and models to

be built around the cost-value and timeline relationship.

Impacts for IT Companies

Outsourcing has now become a common practice because it gives countless advantages to

parties, both hiring and the hired. The major benefits of outsourcing are stated below:

1) The cost of labor is less in the developing countries. The developed countries take

advantage from it and instead of using their expensive labor they hire equally, or

even more, talented people of the third world countries, like India.

2) The increase in global and local market shares has brought the whole world under

great competition. The companies think that if their rivals are benefiting from

outsourcing then they should also get the benefit from it.

3) More time can be spent on the core strategic issues of the company, if some tasks

are outsourced.

The outsourcing provides many benefits, but there are also some weaknesses which cannot be

ignored at the same time. In outsourcing the company completely put its trust and confidence in

the hired company and expects them to complete the task in the expected time. This may not

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always be the case; the company may not even get satisfactory results. It is the hiring company

that will lose customers and will be questioned. Their reputation will be at stake, for trusting the

wrong people. The company will also lose control of the department they have given someone

else to manage. But in the end, a business has to take some effective measures including risks to

prosper, and also, more and more IT security systems are developed each day to offset or

minimize such risks. Internal risks are also there for unethical access of data and information,

therefore, one should apply the best security practices to secure its ITM and look forward to

growth.

Hackers all over the world can hack almost any system for their malicious intents and nobody

can stop them, except to be more vigilant and keep on developing more secure IT protocols.

Conclusion

Every model has its own advantages and disadvantages. It is up to the company to choose how

they want to reduce the workload on them and take help from some other company or

workforce. A new IT project should be thoroughly analyzed and then decision should be taken,

whether it should be outsourced, off shored or out tasked. The company should not only think

about their profits, but should also consider the betterment of the people and their country. The

world has now become a global village and technology is what is running our lives, so better

technology can help people to spend better life. Outsourcing, off shoring and out tasking has no

doubt benefited the third world countries, but the negative impact which it had on the first world

nations cannot be ignored as well. The people of these countries have become restless and

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displeasing about their lost jobs. But the blame does not go on these approaches, but on the

policies which have created the false image of these practices and caused outsourcing failure

and heavy losses. Poor governance, lack of communication, lack of cultural misfit, lack of good

policies are some of the reasons due to which many companies has burned their feet due to

outsourcing. There is a need to create more awareness about the limitations on outsourcing, off

shoring and out tasking.

After conducting this research what we have found is that there are various limitations

associated with the process of outsourcing and it has its own advantages and disadvantages

associated at the same time. The basic limitation faced is the access to the actual current figures

in this regard. As this process involves different companies situated within countries, it has

made it harder to fully grasp the situation and discuss it in detail in this regard, but with the help

of current available literature through book and online resources I have tried my level best to

discuss major aspects in detail for evaluation.

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References

Barack Obama targets outsourcing again. (Sep 10, 2010). The Times of India .

¹ Gartner Outlines the Top 10 Forces to Impact Outsourcing and IT Services Industry. Sep.

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Delen, G. (2009). IT Outsourcing: An Introduction . Van Haren Publishing.

Doerken (2005). Offshoring ... benefits the consumer. Retrieved from:

http://www.usatoday.com/tech/techinvestor/industry/2005-01-16-dhl-advice_x.htm.

Engardio, P. (2006, January 30). The Future Of Outsourcing . Retrieved from Business Week:

http://www.businessweek.com/magazine/content/06_05/b3969401.htm

Impact of Outsourcing. Retrieved from: http://www.wisegeek.com/what-is-outsourcing.htm

Jenyns.(2011). 5 Top Reasons To Out-Task Your Business. Retrieved from:

http://www.melbourneseoservices.com/out-task/.

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insourcing/

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Veen, Annelies van der; Jan van Bon (2007). Foundations of ITIL V3. Van Haren Publishing. ISBN 978-

90-8753-057-0

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²April 2013 article in Entrepreneur Magazine (More Businesses Turn to 'Near-Sourcing' to Save

Time and Money)