Question

IT Project Management:

Explain in detail and give 3 references:

List five reasons why organizations outsource. When should an organization choose not to outsource? Why are some organizations moving their software development work back in-house? Why are some organizations beginning to use onshoring?

Answer 1

Part 1

Companies outsource for a various reasons. The the two most basic necessity of outsourcing is to lower the cost of producing goods.

The five reasons why an organization outsource is:

1: Low labor costs: Low labor costs is the primary reason why organisations outsource. For example outsourcing to India can give you access to services of international quality at a low cost,

2. Outsourcing helps to focus on the main objectives of business- Does the name Alibaba ring a bell?? Alibaba.com started as a small Internet company, and has grown into one of the world’s largest internet global e-commerce sites.The interesting thing about Alibaba is they outsourced many of their projects to grow. The reason behind this is outsourcing gives you the flexibility to focus on the core aspects of your business. Since outsourcing increases the work flow, you can finish your projects faster.

3.Outsourcing can give you access to better capabilities and technoogies:Outsourcing can give you access to specialized skills that cannot be found locally. For example, you require a skilled mobile application developer at a low cost, but are unable to find one. Outsourcing can help you gain access to such skills.

4. Helps in sharing risk management: When a company aquires outsourcing the all the risks in business is not handled by organization alone. For example : Consider a smartphone company that outsourced some other company in building phone camera. Then the risks involved in the camera section is controlled by the outsourced company.

5.)  Outsourcing can compensate for insufficient internal resources: If you are short on resources, it is best to outsource, as you can save yourself the trouble of hiring, training and retaining new resources.

Part 2

There are many aspects which are crucial if a company wants to outsource. The given aspects are crucial when a company should not outsource:

1.)  Quality: If there is a risk in the quality control of the product then the company should not outsource if there is no reliable company available to which you can outsource.It is often more difficult to control quality when a job isn’t being done in your office.

2.)   Confidential: If your business depends on closely guarded trade secrets or client confidentiality, any outsourced work must meet the same standards.

3.)  Branding: Consider companies like Apple etc since there is a risk of defamation or bad naming then outsourcing can be very risky and should be avoided.

4)  Liability: Not only can outsourcing affect your operations and reputation, it can impact you legally. If an outside provider makes errors or produces work that harms your customers financially or physically, you may be held legally liable.

Part 3

Organizations are moving their software development work back in-house:

Most IT companies try to maintain IT services along with the core activities for more growth of the company. Since there are many competitors companies feel that the software development in-house would help them in growth. Also since software development is a very core activity so outsourcing affects the reputation of the company.

Part 4

On-shoring  is when a company transferred overseas is brought back to its original country.

The main reason for on-shoring is that on-shoring helps in the growth of national economy. Increases job market for individuals .

On-shoring lowers the cost of resources. For example many IT companies are on-shored in India because the cost of employees is much less compared to foreign countries.