Question

This exercise from the book "Information Technology Project Management", for Kathy Schwalbe.
Ch 12: project procurement management, Page 491.

1. Search the Internet for the term IT outsourcing and find at least two articles that discuss outsourcing Summarize the articles and answer the following questions:

A: What are the main types of goods and services being outsourced?.

B: Why are the organizations in the articles choosing to outsource?.

C: Have the organizations in the articles benefited from outsourcing? Why or why not?

Answer 1

Article 1:(Why outsource to philippines?)

Today, Philippines is one of the leading countries in the business process outsourcing market, both in the call center services and non-voice field. To add to that, it is also one of the emerging outsourcing destinations for IT services such as web design, mobile app development, software maintenance, etc. Employment in the BPO sector in Philippines hit an all-time high in 2015 with 1.15 million employees, and continued its upward trajectory with 1.3 million total jobs created in 2016, a number expected to increase 17% annually.

As a result, although many companies still look at India as the obvious choice when it comes to outsourcing business processes, but with the rapidly increasing costs and falling retention rates in India, many are realizing the benefits of outsourcing to Philippines. With revenues set to reach a staggering $48 billion by 2020, Philippines is fast announcing itself as the new heir to the outsourcing crown.

Article 2:(WILL OUTSOURCING CONTINUE TO GROW IN THE YEARS TO COME?)

Outsourcing, which started in the early '90s as a revolutionary phenomenon of sending unskilled work from developed countries to developing countries, has experienced tremendous growth over the past ten years. Now, after more than a decade of outsourcing, the success of outsourcing is being questioned. Will the advantages of outsourcing become overshadowed by governmental pressures and rising offshore outsourcing costs? Will outsourcing continue to grow or be curtailed by force in the years to come?

Industry experts, who have been studying the disadvantages and advantages of outsourcing, feel that the future of outsourcing will continue to remain secure mainly due to the various benefits that outsourcing brings both to the buyer and the offshore provider. The benefits of outsourcing are manifold- the most important being cost-effectiveness and better infrastructure, and this has lead to its sustained growth.

What is being outsourced?

1. Technology services

2. Business Processes

Technology Services

Companies requires advanced IT and communication technologies for their regular operations. Rapid changes in the technology sector bring new capabilities to use for companies that need to select the right kind of vendor to get the best technology at the cheapest cost. Following technology services are generally outsourced by customers:

• Software and applications

• Infrastructure

• Telecommunications

• E-commerce

• Web security and solutions

• Web hosting, website designing, development and maintenance

Business Processes

Various business processes are not core to a company’s main line of business. Companies outsource such processes and focus on their core competence. The various business processes that are being outsourced include the following:

• Back office operations

• Customer relationship management (Refer to the report on Customer Service Outsourcing for more details)

• Sales and marketing (including telemarketing)

• Administrative support

• Payroll maintenance and other transaction processing

• Finance and Accounting

• Human resources and Training

• Logistics, procurement and supply chain management

• Medical transcription

• Security

• Research and analysis

• Product development

• Legal services

• Intellectual property research and documentation

There are many reasons why a company may choose to outsource certain business functions. Some of the most common reasons include:

• Reducing and controlling operating costs (the largest driver)
• Improving company focus
• Gaining access to world-class capabilities
• Freeing internal resources for other purposes
• Streamlining or increasing efficiency for time-consuming functions
• Maximizing use of external resources
• Sharing risks with a partner company

But these reasons aren't enough to implement a successful outsourcing program. In fact, companies must ensure they consider every component and are able to meet the requirements for successful outsourcing.

01)Lower operational and labor costs are among the primary reasons why companies choose to outsource. When properly executed it has a defining impact on a company's revenue recognition and can deliver significant savings

02)Companies also choose to outsource or offshore so that they may continue focusing on their core business processes while delegating mundane time consuming processes to external agencies

03)Outsourcing and offshoring also enable companies to tap in to and leverage a global knowledge base, having access to world class capabilities

04)Freeing up internal resources that could be put in to effective use for other purposes is also one of the primary benefits realized when companies outsource or offshore

05)Many times stranded with internal resource crunches, many world class enterprises outsource to gain access to resources not available internally

06)Outsourcing, many a time is undertaken to save costs and provide a buffer capital fund to companies that could be leveraged in a manner that best profits the company

07)By delegating responsibilities to external agencies companies can wash their hands off functions that are difficult to manage and control while still realizing their benefits

08)Outsourcing and especially offshoring helps companies mitigate risk and is also among the primary reasons embarked upon

09)Outsourcing also enables companies to realize the benefits of re-engineering, revise, and upgrade the project as per the client's requirements.

10)Some companies also outsource to help them expand and gain access to new market areas, by taking the point of production or service delivery closer to their end users

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