Victorian Institute of Technology - MITS4001: IS Outsourcing Report

This report delves into the realm of Information Systems (IS) outsourcing, examining its increasing prevalence in modern industries and its impact on business operations. It explores the concept of IS outsourcing as a strategic approach to delegate IT activities to external providers, enabling organizations to concentrate on core business functions. The report highlights the benefits of IS outsourcing, such as cost reduction, access to specialized expertise, and enhanced efficiency, while also addressing the challenges associated with it, including security concerns, negotiation complexities, and the need for effective resource management. The report further analyzes the mitigation strategies for these challenges, emphasizing the importance of robust security measures, meticulous negotiation processes, and strategic project management. In conclusion, the report underscores that successful IS outsourcing requires careful planning, diligent monitoring, and proactive risk management to maximize its benefits and minimize potential drawbacks.

INFORMATION SYSTEMS OUTSOURCING -
VICTORIAN INSTITUTE OF TECHNOLOGY
1

Abstract— The discussion is regarding the outsourcing in the
information system. It has been seen that the use of technology
has changed the business process in the industry. Apart from
that, it has been seen there are different advantages and the
challenges regarding the outsourcing [1]. In order to understand
the different perspective of the outsourcing, the evaluation of the
concept of the outsourcing is mentioned in this paper. Apart
from that the mention of the challenges and the advantages of the
outsourcing are also discussed in this context.
(Keywords— IS Outsourcing, security, negotiation, benefits
)
I. INTRODUCTION
The outsourcing is the process where the collaboration
between two or more than two organization is occurred. It can
be said that the outsourcing is the business process in IT
where certain works are assigned to a third party organization.
The responsibility of the third party organizations is to execute
the work on behalf of the client. There are certain advantages
and challenges of IT outsourcing. In most of the cases, it has
been seen that the IT outsourcing is causing benefits for both
the parties in the business deal [4]. However, due to some
external factors the supply of the man power and human
resource can be problematic. In this situation, it can be said
that the use of the outsourcing needs to be strategic in the
business.
Outsourcing
Outsourcing is the concept where the IT issues and the works
are resolved by the another third party company. It has been
seen that many product based organization faces some issues
in manufacturing due to the lack of the customization. In this
situation, that organization can employ any third party IT
company to solve the problems accordingly. In this case, it is
the responsibility of the third party organization to solve the
IT issue in a proper way. Apart from that the troubleshooting
and the solutions are needed to be provided by the third party
organization to the product based company.
II. BENEFITS AND CHALLENGS IN INFORMATION SYSTEMS
OUTSOURCING
A. Benefits
There are certain benefits of information system
outsourcing. It has been seen that most of the product
based companies are taking help from the well-
known third party organization. The works are
outsourced to this organization. In this situation, the
third party companies are getting better revenue and
their profits are increasing [3]. On the other hand, the
lack of human resources and the experts in the parent
organization is not affecting the production of the
organization. This also mitigates the human resources
problem and overhead running cost for the
organization.
Apart from that the efficiency of the organization can
be increased significantly. Outsourcing provides the
organizations a chance to utilize the large pool of
talents and make the work done by the experts.
B. Challenges
Along with the benefits there are certain challenges
regarding the use of the outsourcing in the
organization. It has been seen that maintaining the
outsourcing is a complex project [6]. In this situation,
the processes in the outsourcing is needed to be
controlled by the project manager in the organization.
Apart from that, it can be said that the negotiation
process is important for the further development of
the outsourcing process.
There are some important decisions those are needed
to be made by the organization adapting the
outsourcing for the information system process. The
negotiation process is needed to be done in a proper
way. Apart from that there is a need that the selection
of the right resources to be outsourced. Moreover, it
is the responsibility of the organization to select the
right third party organization to where the project
will be outsourced.
There is a high chance that the project can be failed.
In this case, the outcome of the project may not
deliver the desired result. This will affect the
functionalities of the organization.
Managing of the resources are another problem for
the organizations dealing with the outsourcing [8]. It
has been seen that sometimes, the organizations
providing the outsourced work to the other
organization is not getting the proper resources.
Apart from that if the business unit and the technical
unit is not collaborating with each other there is a
chance that the outsourced project may be failed.
The initialization of the costing and the time is
important for the outsourcing of the projects. It has
been seen that if the costing is not done in a proper
way, there is a possibility of the overflow of the
budget that will hamper the profit of the organization
[3]. Apart from that if the third party organization is
not following the project life cycle process in a
proper way, there is a chance that the scope creep can
be present in the project.
Moreover, there are security issues regarding the
outsourcing process. In case, if the third party
organizations are not following the proper rules and

regulations regarding the development of the project,
there is a chance that the breaching of the data can
occur which is not desirable in this situation.
Mitigation of the challenges
There are certain ways to mitigate the challenges
faced by the organization during the outsourcing
process. It has been seen that during the outsourcing
process, maintaining the security is one of the
concerned issues. In this case, the parent organization
is needed to be aware about the security standard the
third party organization is using [5]. Apart from that
in this context, the proper negotiation steps can be
taken.
Apart from that it is the responsibility of the project
manager in the organization to manage the processes
in the outsourcing. It has been seen that during the
development of the outsourcing plan, certain steps
are needed to be considered [7]. The selection of the
organization for the outsourcing process is needed to
be maintained in a proper way. Apart from that the
organization has to be ensured that the delivery of the
resources will be done properly in the outsourcing
process.
III. CONCLUSIOIN
The discussion is regarding the outsourcing of the
information system. It has been seen that there are
certain benefits of the outsourcing process those can
help the business organizations to expand the
business. On the other hand it has been seen that
along with these advantages there are some of the
challenges those are needed to be managed in a
proper way. Along with that there are some of the
responsibilities of the project manager in the
organization and these responsibilities are needed to
be accomplishes properly. From this point of view it
can be said that the development of the outsourcing
can generate proper outcome if the monitoring
process is done properly. Apart from that the
mitigation of the challenges are needed to be done in
a proper so that there is a least possibility for the
failure of the system.
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