IT Outsourcing: Advantages, Risks, and Mitigation Strategies

This article discusses the advantages and risks of IT outsourcing, including cost-effectiveness, increased efficiency, and loss of control. It also provides mitigation strategies to reduce risks and improve service quality.

MITS4001 Business Information Systems
Abstract
The outsourcing refers to the hiring of an outside with independent firm to perform a business
function for the internal employees. The organization outsource the jobs mainly to the
specialized service companies with operations that are set to continue with the wave of impact on
information technology field. IT outsourcing includes the data center operations with desktop
and helping desk support, with software development, with outsourcing e-commerce. The
advantages of the outsourcing of IT works on allowing management to detail a specialized
company with removing details and permitting the management to focus on larger issues in
organization [1]. The specialized company works on handling outsourcing of IT work that tends
to boast technological capabilities. The organization views the outsourcing which is cost
effective with means to expand into countries and new marketing standards as well. The
problems are related to reducing and eradicating the direct communication in between the
organization and clients. The limited communication includes the impedance of building process
that leads to overall dissatisfaction of organization and client [2]. The problems are related to
loss of complete control in the country where the project implementation timelines also tend to
suffer. The organization terminates the agreement with outsourcing the entity, confidentiality and
sensitive information that tends to become jeopardized. The outsourcing of IS functions include
focusing of own business strategies with increased business efficiency. The risks of IT
outsourcing includes IT services that runs a risks related to receiving the poor quality of work.
The offshore sites tend to experience a high employee turnover which will capitalize on
organizational limited capabilities. It leads to the high-quality service which involves the hidden
costs, like travel expenses and then creating an infrastructure to manage operations [3]. The

mitigation of the risks includes recognition of cultural similarities between itself and specialized
firms. The current trends are about how the organization begin the re-negotiating contracts with
specialized firms focusing on costs that continues to be a major issue for the companies and then
ensuring value of investment. The technology and software employment tends to continue with
decrease even after the economy is improved. The global service providers aim to capture a
larger share of IT working and service. The outsourcing is a common practice which helps in
working on different business functions and processes for the third-party providers [4]. It helps
in improving focus on core business activities where the outsourcing can lead to controlling
increased efficiency with the specialization in the process or the service one wants to carry. The
controlled costs with increased reach of the access to the capabilities and facilities is not
otherwise accessible or affordable. There are issues related to the delivery of service and
confidentiality with security that might be at risk. The outsourcing is helpful where it works on
improving the focus mainly on core business activities that will help in concentrating on future
strategy. It helps in specializing the processes or services where one wants to carry and achieve
the productive, efficient service and a greater quality of product. The controlled costs and the
increased reach helps in handling the outsourcing with accessing capabilities and facilities. The
greater competitive advantage related to outsourcing is about that it helps in leveraging a
knowledge and skills for completing the supply chain. It is mainly for making the business
flexible and agile where the ability is to adapt the market conditions and the challenges. The
problems are related to the concerns about service delivery, confidentiality and security with
major lack of flexibility [5]. The management difficulties and the changes at outsourcing a
company can lead to friction issues. The instability of the outsourcing company could also be
one out of business. Hence, there is a need to focus on the additional challenges like the hidden

costs of the provider and problems related to security standards. The factors that help in updating
the IT system is based on offering the up-to-date technology and service. Here, there is a
possibility to reduce the costs for the companies where there is no longer needing to pay for any
certifications or the administrative costs as well, which is related to the training of the staff and
then complying to the certification deadlines. The problem is also about the variations in the
quality standards which can be improved using the Service Level Agreement.
References
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