Victorian Institute of Technology: MITS4001 IS Outsourcing Report

This report examines the multifaceted aspects of Information System (IS) outsourcing, a practice where organizations delegate their IT functions to external service providers. The report details the benefits, including disaster recovery capabilities, cost reduction, scalability, and access to IT expertise. Data centers are often equipped with advanced technology and backup plans. Outsourcing allows for fixed or monthly payments, saving on capital outlays and IT staff. It also provides scalability to address rapid business growth. Furthermore, outsourcing provides access to technical expertise and sophisticated IT services. However, the report also addresses the challenges associated with IS outsourcing, such as control issues, security concerns, compatibility problems, and a lack of coordination between business and IT goals. The report concludes by emphasizing the importance of carefully managing these challenges to maximize the benefits of IS outsourcing.

Running head: INFORMATION SYSTEM OUTSOURCING
INFORMATION SYSTEM OUTSOURCING
Name of the Student
Name of the Organization
Author Note

1INFORMATION SYSTEM OUTSOURCING
Abstract
This particular study mainly aims at describing several benefits or rather advantages of
the system of information and also all the several kinds of challenges which are hugely noticed to
be directly associated with the services of outsourcing. It has been observed that several services
of outsourcing of information technology has become very much easy as well as rewarding at the
same time because several vendors who are mostly belonging to the third party are currently seen
to be highly providing with a huge number of services which will be very much requirement
scalable of the enterprise without having any kind of huge infrastructure investments. Several
centers of data are to be taken as example possessing with the capability of providing cloud
computing and a number of technologies of a particular convergence which will be hyper,
database analytics, several kinds of plans of recover from disasters and also all other specific
services which are highly valuable. All of such services are going to be providing the enterprises
involving both the small and the medium sized ones having the ability to compete with different
huge enterprises. All such services belonging to the third party will be providing all the huge
enterprises with a number of resources as well as planning, mainly a strategic one. It is to be
remembered that there are a number of risks which are seen to be associated with the provider of
the third party. All of risks of starting will be making sure regarding the working with an
appropriate company which will be particularly the one providing with different IT services
which the enterprise is seen to be actually needing. All other different concerns includes a lack of
proper control mainly a direct one of IT, location of the center of data even a large range of a
number of activities which any outside vendor will be really offering. This particular study will
be including all the different risks and also all the benefits of the information system of
outsourcing.

2INFORMATION SYSTEM OUTSOURCING
Introduction
Because of the rapid increase in the growth in several technological advancements in
some of last few years, it can be easily noticed that the technology of information if systems are
seen to have become a machine of driving of all the different modern enterprises. It has been
seen that in the last few decades, information system outsourcing is seen to have been becoming
a fully common place [1]. The information system outsourcing is actually a specific practice for
turning over a particular part or even all the functionalities of IS of the enterprise to several
external providers of service. By utilising all the different functions of the outsourcing of
information, a huge number of organizations are being able to directly focus upon several
business strategies and also in increasing the business efficiency as well. It has also been seen
that a huge number of benefits and also a large number of challenges are seen to be directly
associated with the outsourcing of IS.
Benefits of outsourcing
The main benefits of outsourcing services have been discussed below:
 Disaster recovery is one of the most important benefits of outsourcing. A number of data
centers are noticed to be properly equipped in a finer way to directly obtain upward
technology of information and run in real time because they possess a huge number of plans
within a particular place [2]. Data centers are routinely seen to be properly working on
disaster recovery. They are actually doing it for all the huge number of clients. Proper plan
will be including a proper architecture of a specific hardware in an appropriate place and also
few backups as well which will remain full ready of a number of essential items. Outside

3INFORMATION SYSTEM OUTSOURCING
vendors may also possess a specific kind of software which can easily reload all the older
kind of applications, data and also some network connections as well.
 Low cost is another big benefit of the service of outsourcing. Outsourcing is seen to be done
normally on any specific fixed or rather on a free monthly basis as well and this provides
help a lot to save on several capital outlays for several IT resources and also hiring of several
staffs of IT [3].
 Scalability is considered to another beneficial component provided by the services of
outsourcing. Most of the in-house enterprises or companies are seen to be often planning for
several requirements of IT and also for a number of factors in a small growth factor. When
any specific enterprise is growing rapidly, it is to be known that there will always be a
number of several problems which will be associated with it and can be addressed [4]. A
collection of brand new software along with a number of storage devices and also servers
will be needed a lot among all other IT concerns. Even brand new networks will be required
a lot and all the newly introduced systems must be compatible with all the currently existing
systems. All such new data and information will be needed for quickly meshing up with the
older data.
 IT expertise is another benefit of the outsourcing services. Several vendors involved in the
process of outsourcing possess a number of technical expertise and also a huge number of IT
services which are highly sophisticated. They are capable for explaining all the several
options related to IT of the particular enterprise, properly reviewing regarding what will be
the best option to be suited and even discussing the procedure with the help of which data
center is seen to be meeting all the set goals [5]. Possessing IT expertise as well as resources
will actually result in a better performance and also service at hugely affordable prices.

4INFORMATION SYSTEM OUTSOURCING
Challenges faced during outsourcing
Apart from some benefits, it is also to be remembered that there are a number of
challenges as well which are seen to be associated with the outsourcing service. Some of the
challenges are discussed below:
 Controlling problem is quite big challenge which is mainly noticed in the service of
outsourcing. When any particular enterprise is outsourcing most of the information
technologies of it, it is mainly placing a huge trust or faith in a third party and will mainly
reply upon their particular expertise, resources as well as services [6]. But, it has been seen
that there is often a working out of transaction. It is even seen that sometimes any enterprise
is not at all satisfied with the third party vendors and there is a huge need for doing some
more rather than just starting from a particular scratch. There is a huge requirement for a
proper coordination with the outside vendor possessing with some full new plans of IT and
this will be including building of in-house information technology or rather use of some any
other vendor.
 Security is another issue which is very much challenging during the service of outsourcing. A
number of cloud computing services are highly responsible for sharing their several resources
with different tenants and this particular sharing will help in cost savings and also in making
the IT a scalable one. It does not mean that other enterprises will be using same devices and
services. This will be helping in the creation of a number of huge concerns which are directly
related to security which are highly required to be addressed when the company will be
possessing several strict compliance needs [7].
 Another issue which is often seen to be rising is the problem related to compatibility.
Compatibility of the services of information technology can become a massive issue mainly

5INFORMATION SYSTEM OUTSOURCING
when any enterprise will be noticed to be have been keeping its in-house IT and also the
outsourcing as the part of the total system of information.
 It has also been noticed that there is always a lack of coordination which is highly noticed in
between several goals of the business and the IT goals. Several outsourcing vendor are not
seen at all to be having a specific daily understanding of business of the enterprise [8]. There
are seen to be possessing with the capability of properly understanding all the information of
technology and also a huge number of issues which are seen to be associated directly to the
general sector of business. But it is to be made sure that they must not work always directly
with several employees and also with different customers. There is a huge requirement for
obtaining discussion which will be related to the huge lack of an appropriate coordination.
There are also some other various risks or challenges as well which will be including huge
damage to the center of data, a number of international issues for the enterprises possessing a
number of abroad offices and also a number of different concerns [9].
Conclusion
It can be concluded that as there are a number of benefits which are seen to be highly
associated with the outsourcing service there are also a number of risks or challenges as well
which are seen to be facing during the service of outsourcing. All the challenges which have
been discussed in the entire study must be handled with much care. It is very much important to
handle several challenges with huge care so that any particular enterprise will be able to gain
more and more benefits from the service of outsourcing rather than facing a huge number of
challenges.

6INFORMATION SYSTEM OUTSOURCING
References
[1] Dolgui, A. and Proth, J.M., 2013. Outsourcing: definitions and analysis. International
Journal of Production Research, 51(23-24), pp.6769-6777.
[2] C. Samantra, S. Datta and S.S. Mahapatra. Risk assessment in IT outsourcing using fuzzy
decision-making approach: An Indian perspective. Expert Systems with Applications, 41(8),
pp.4010-4022, 2014.
[3] J. Viitanen and R. Kingston. Smart cities and green growth: outsourcing democratic and
environmental resilience to the global technology sector. Environment and Planning A, 46(4),
pp.803-819, 2014.
[4] Hirschheim, R., Heinzl, A. and Dibbern, J. eds., 2013. Information Systems Outsourcing:
enduring themes, emergent patterns and future directions. Springer Science & Business Media.
[5] S. Patil and W. Wongsurawat. Information technology (IT) outsourcing by business process
outsourcing/information technology enabled services (BPO/ITES) firms in India: A strategic
gamble. Journal of Enterprise Information Management, 28(1), pp.60-76, 2015.
[6] R.A. Noe, J.R. Hollenbeck, B. Gerhart and P.M. Wright. Human resource management:
Gaining a competitive advantage. New York, NY: McGraw-Hill Education, 2017.
[7] T. Bayrak. A decision framework for SME Information Technology (IT) managers: Factors
for evaluating whether to outsource internal applications to Application Service
Providers. Technology in Society, 35(1), pp.14-21, 2013.
[8] S. Ali and S.U. Khan. Critical success factors for software outsourcing partnership (SOP): a
systematic literature review. In 2014 IEEE 9th International Conference on Global Software
Engineering (pp. 153-162). IEEE, 2014.
[9] X. Zhao, L. Xue and A.B. Whinston. Managing interdependent information security risks:
Cyberinsurance, managed security services, and risk pooling arrangements. Journal of
Management Information Systems, 30(1), pp.123-152, 2013.

7INFORMATION SYSTEM OUTSOURCING