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ITM OUTSOURCING
P a g e | 2 
Table of Contents 
Introduction.................................................................................
P a g e | 3 
Introduction 
It is a fact that technology has not only changed the way of thinking but has also changed the ...
P a g e | 4 
Problem Statement 
Outsourcing has become a hot topic for debate recently, especially in the developed countr...
P a g e | 5 
It would also be imperative to do a thorough cost-benefit analysis for the outsourcing project. If 
the merit...
P a g e | 6 
In context of strategic management the role of IT is very crucial in producing ‘Balance Score 
Cards(BSC), st...
P a g e | 7 
network of servers, storage of data, security network and its application management with 
agility, accuracy ...
P a g e | 8 
We will need to be wary of vendors who bid at comparatively lower rates that what we expect. 
This could mean...
P a g e | 9 
This would help us in defining what particular nomenclature will suit us to be inducted and 
executed in our ...
P a g e | 10 
were agreed upon. Any marked deviations from the outcomes, the vendor will compensate on 
free cost and time...
P a g e | 11 
System Analysis and design is the method of designing information systems that make leverage 
the tools of i...
P a g e | 12 
Our team of system analysts will concentrate on providing complete solutions that meet the 
client’s needs a...
P a g e | 13 
System and Network 
Here is another area which we have to consider with a great deal of thought, foresight, ...
P a g e | 14 
 Lower IT cost structure 
 Improve IT services relative to the best practice of ITM 
 Upgraded and contin...
P a g e | 15 
standards and criteria in place that will be established with the consent of all the stakeholders, 
managers...
P a g e | 16 
The organization’s data may be very confidential, may have business growth secrets and other 
discreet natur...
P a g e | 17 
Definitions 
Some of the important terminologies are briefly defined here. 
Outsourcing: 
It is a process of...
P a g e | 18 
specific job/s which may not be feasible to do in house or where there is lack of expertise is 
lacking to p...
P a g e | 19 
Knowledge Process Outsourcing: 
In this form of outsourcing, knowledge and information-related work is done ...
P a g e | 20 
by Carlos Sanchez Ivy business journal 
Strategy | May / June 2010 
Recruitment Process Outsourcing (RPO): 
...
P a g e | 21 
In Sourcing: 
It is the process of allocating tasks or jobs to an internal entity that is dedicated for that...
P a g e | 22 
organization, with an objective of transfer of technology at a lesser cost to gain comparative 
advantage an...
P a g e | 23 
However, this concept is based on placements of business operations near to the locations where 
suppliers a...
P a g e | 24 
and control systems. The quality of ITM has a direct bearing n the system dynamics of the 
organization. In ...
P a g e | 25 
other companies to get the quality work done related to Information Technology (Jenyns, 
2011). 
There are a...
P a g e | 26 
Supply Chain Management 
With the tremendous surge in outsourcing, a large amount of functions are deployed ...
P a g e | 27 
(if done with innovation) in creating financial leverage between one organization and others in 
the industr...
P a g e | 28 
It needs to be done primarairly though; 
 Better planning to find out the best available concentration of s...
P a g e | 29 
The IT system will provide us real time analysis of comparisions of such supply chain 
parameters, interal v...
P a g e | 30 
Other than outsourcing, another way for IT industry to substitute a service from any foreign 
source is off ...
P a g e | 31 
‘transaction cost’? The efficacy of this multidirectional relationship between two or entities must 
have co...
P a g e | 32 
always be the case; the company may not even get satisfactory results. It is the hiring company 
that will l...
P a g e | 33 
displeasing about their lost jobs. But the blame does not go on these approaches, but on the 
policies which...
P a g e | 34 
References 
Barack Obama targets outsourcing again. (Sep 10, 2010). The Times of India . 
¹ Gartner Outlines...
P a g e | 35 
Veen, Annelies van der; Jan van Bon (2007). Foundations of ITIL V3. Van Haren Publishing. ISBN 978- 
90-8753...
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Strategic Management and Information Technology Outsourcing

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Projects in Strategic Management, pertaining to the different parameters of projects involved in overall functioning of value projects.

This brief describes hoe the organization have different choices to utilize the information technology management (ITM) impacts in different options of outsourcing and its importance in terms of impacts on its value chain performance.

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Strategic Management and Information Technology Outsourcing

  1. 1. ITM OUTSOURCING
  2. 2. P a g e | 2 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
  3. 3. P a g e | 3 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.
  4. 4. P a g e | 4 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.
  5. 5. P a g e | 5 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.
  6. 6. P a g e | 6 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
  7. 7. P a g e | 7 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.
  8. 8. P a g e | 8 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.
  9. 9. P a g e | 9 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
  10. 10. P a g e | 10 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.
  11. 11. P a g e | 11 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.
  12. 12. P a g e | 12 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.
  13. 13. P a g e | 13 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;
  14. 14. P a g e | 14  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
  15. 15. P a g e | 15 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.
  16. 16. P a g e | 16 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.
  17. 17. P a g e | 17 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
  18. 18. P a g e | 18 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.
  19. 19. P a g e | 19 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 ᵒ control, along with personal involvement.
  20. 20. P a g e | 20 by Carlos Sanchez Ivy business journal Strategy | May / June 2010 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.
  21. 21. P a g e | 21 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
  22. 22. P a g e | 22 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.
  23. 23. P a g e | 23 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
  24. 24. P a g e | 24 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
  25. 25. P a g e | 25 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.
  26. 26. P a g e | 26 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
  27. 27. P a g e | 27 (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.
  28. 28. P a g e | 28 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.
  29. 29. P a g e | 29 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.
  30. 30. P a g e | 30 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
  31. 31. P a g e | 31 ‘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
  32. 32. P a g e | 32 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
  33. 33. P a g e | 33 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.
  34. 34. P a g e | 34 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. 2010. http://www.gartner.com/newsroom/id/1433214 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/. http://www.intetics.com/the-search-for-a-better-outsourcing-model-benefits-of-remote-insourcing/
  35. 35. P a g e | 35 Veen, Annelies van der; Jan van Bon (2007). Foundations of ITIL V3. Van Haren Publishing. ISBN 978- 90-8753-057-0 Bird, M. (2010). Modern Management Guide to Information Technology. Create Space http://www.pinkelephant.com/PinkVERIFY/PinkVERIFY_2011_Toolsets.htm "PinkVERIFY 2011 Toolsets". Pink Elephant. April 2014 Malcolm Fry (2010). ITIL Lite. The Stationery Office. ISBN 978-0-11-331212-2. HROA Special Interest Group Publishes Definition of RPO, Feb. 19, 2009 BSI Group Fast Facts Sahay,S (2003). Global IT outsourcing: software development across borders . Cambridge University Press. Wijers, G. (2009). It Outsourcing: Contracting the Partner. Van Haren Publishing. ²April 2013 article in Entrepreneur Magazine (More Businesses Turn to 'Near-Sourcing' to Save Time and Money)

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