Information System Outsourcing: A Literature Review (MITS4001)

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MITS4001
BUSINESS INFORMATION SYSTEMS

Abstract
In this file literature review would be
performed on the topic Information
System outsourcing, first, there will be a
brief given on this topic so that the reader
would get a clear idea on how outsourcing
is done? what are the advantages of
outsourcing? What are the disadvantages
of outsourcing? What is the motive behind
this technique? What are the challenges
faced while outsourcing the work? All
these questions will be answered in this
assignment, and images will be added to
make the file more interesting and clear
the concepts of the reader.
Information System outsourcing
The word outsourcing refers to the process
of hiring part-time employees who can
work for the organization. IS outsourcing
refers to handling the information
technology part of the organization.
Organization hire part-time employees or
outsource their work as this cheaper and
the excess work is managed efficiently.
The organization sends the work to be
completed in the outer market which
decreases the pressure on the employees.
Various benefits of outsourcing which may
be considered are:
Outsourcing motive
Cheaper Cost: One of the main reason for
an organisation to outsource the work is
that the work is done on cheaper rates as
the cost of infrastructure is reduced to a
minimum as the no place is needed for the
employees to sit and work, they can work
at their own places. Labour cost is cheaper
in out-market and tax is saved.
Speeding in business development: As in
outsourcing there is a huge market and
there are people available to work partially
for the organization. Number of employees
means more work can an organization
have and more speedily the work is
completed.
Focus on main work: By disturbing the
extra work in outsourcing the permanent
employees have the time to focus on main
work and have less pressure which
increases the efficiency and quality of
work.
Resources or skills availability:
Sometimes the work is also outsourced
when required skills or resources aren’t
available in the organization and hiring
permanent employees for that work or
buying the resources for that work would
be expensive.
Outsourcing Advantages
Availability of resources: There is a wide
network of skills present in the market, the
part-time employees who are available for
a short duration of time can work for the
organization. The skills or resources
available in the market can be access by
the organization. There are various types
of resources available in the outer market.
Expenses Managed: This is a good way
of cost-cutting as different countries have
different operational cost to handle a
project as different countries have a lower
pay scale.
Workflow: This wouldn’t hamper the
workflow of the organization as when the
burden is increased in the organization, it
makes the work available for outsourcing
so this decrease the pressure on employees
and maintains a healthy environment
within the organization. By doing this the
work is completed on time and
organization image is uplifted.

Upscaling the organization: The
organization would build an image for
doing the work on time and with
perfection so from next time the person
would come to the same organization to
give the projects.
Outsourcing Disadvantage
The difference in timings: There can be
a time difference between the countries so
it is quite difficult to communicate with
each other. For example, in a country it is
morning and in some other country it is
night then it would be a bit difficult to
communicate.
Language: language is the main barrier as
due to this miscommunication can take
place and the meaning of the work which
is to be performed can be changed. So all
the efforts put in to complete the work
would be a waste of time and energy.
Working Environment: Different places
have different culture and a person is used
to that culture only. If a person does some
work, then it would contain the essence of
his culture whether it would be in his
writing style or the project he is working
on.
Distance: Sometimes there are trips to be
made between outsourcing vendor or
outsourcing organization and person who
is doing the work. So this can be expensive
and time-consuming.
Challenges which were faced in
Outsourcing:
Not taking the right decisions: In this
challenge, after signing the contract
between the outsourced employee or an
organization, there might be some case in
which decision problem may arise due to
some authority issues or some problems
related to the budget of the project. This
will lead to a challenge in IS Outsourcing.
Very less support from client’s: After
delivering the services to an organization
the services may be un-updated for a
longer period of time. For maintaining any
issues which were related to the project
very long timestamp is being taken for
solving those issues.
Less Mutual Understanding: To develop
a business, understanding between two
entities should be preferred which will
improve the business terms and will help
in any kind of support which will be
required by a client. To develop a
business, understanding between two
entities should be preferred which will
improve the business terms and will help
in any kind of support which will be
required by a client. Various employee has
some personal view and will work
according to their mind set.
Retaining team which have less required
Skills: After retaining a team from a client
which will perform outsourcing with an
organization, if the team which is being
retained by the client will not be able to
manage properly with the working
environment of the organization or will
lack in skills which is being required in the
project. This will may cause less efficient
solution to the business problem and will
lead to form an in appropriate business
model.

References:
DAXX Nearshore IT. (2019). What Are
Outsourcing and What Are the Benefits of
IT Outsourcing?. [online] Available at:
https://www.daxx.com/blog/development-
trends/what-is-outsourcing-benefits-of-
outsourcing#2-what-is-it-outsourcing
[Accessed 9 May 2019].
Medium. (2019). Types of IT Outsourcing
and Types of Contracts In Outsourced
Software Projects Management. [online]
Available at:
https://medium.com/existek/types-of-it-
outsourcing-and-types-of-contracts-in-
outsourced-software-projects-
management-c7b18d7d63ea [Accessed 9
May 2019].