Posted: April 12th, 2022

IS Outsourcing

IS Outsourcing

Outsourcing information systems has been on the rise among companies as it helps the management to focus on the business strategies that help it achieve its goals. Having a third party handling the systems saves time and energy a company could have spent if it was to manage its own systems.
Literature Review
The literature review is based on a study on information systems outsourcing reasons and risk. According to the study, there was a need to highlight the benefits of outsourcing to firms. The study has also analyzed the risk factors associated with outsourcing to educate firms on what to watch out for.
Study population
Large Spanish firms were used where their evolution was examined.
Study design
Questionnaires were administered to the managers of the largest Spanish firms. The managers were in charge of the Information systems department.
Findings
Outsourcing provides an organization with an opportunity to better IS services and technological growth. The risks to outsourcing are majorly associated with insufficiency on the side of the provider such as lack of compliance with the contract.
Benefits
Outsourcing makes it easier for companies to have a keen focus on their basic competencies since the line managers do not have to spend their energies coordinating with the IS department. It is easier than for the line managers to organize work within the firms without having to worry about the IS. On the other hand, the firms hired to outsource the IS services in many cases only focus computer system and will have enough time to focus on delivering quality services. Secondly, outsourcing increases flexibility for firms. Through the continuous redesign of contracts, the firm has an opportunity to prevent a situation where there could be technological obsoleteness. Thirdly, the provider can access more improved technologies and make use of its staff to deliver a better quality of work to clients. In many cases, the outsourcing staff may be more committed to increasing the quality of work than an internal team.
Getting rid of routine tasks within a firm’s IT department is avoided by outsourcing IS. Some tasks may be problematic for the firms and hence outsourcing helps to eliminate such functions. Firms can access state of the art technology which has been customized to meet the unique needs of the firm. Firms do not have to make an investment in mature technology since the outsourcing company has that in check. Firms may also choose to observe the consequences of new technology on the outsourcing company without having to feel the impact which minimizes risk. Lastly, companies get to save cost on IT staff. management of IT requires highly qualified personnel team which would mean that the company would either have to hire a team of experts or to train its existing staff which would be a very costly experience.
Challenges.
Firms risk the loss of both business and technical knowledge and experience by sending their staff to the providers who after the signing of the contract, will send their most qualified staff to other new clients a marketing strategy. The providers in many occasions fail to comply with the contract hence failing to meet the needs of the client. There may be a hidden cost in outsourcing that makes the process costlier than estimated. Some of the costs include hiring and search for vendors, cost of transition, and management costs. Lastly, there may be an unclear cost-benefit relationship between the firm and the IS outsourcing company.
References
Gonzalez, R., Gasco, J., & Llopis, J. Information systems outsourcing reasons and risks: a new assessment. Industrial Management & Data Systems, 110(2), 284-303.

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