Essay about Outsourcing at Office Supply Inc. Case

After analyzing all these risks and criteria Id like to present some points to demonstrate why we should go for outsourcing:

Because many businesses in the US have more often began outsourcing different business products instead of doing them in-house, it is important to understand why outsourcing may be the best option. Although many tie outsourcing to foreign markets, outsourcing can include both foreign and domestic markets. By entering into a contractual agreement, outsourcing allows organizations to pay for services they need. This gives the option for a business to get professionals to perform services for them that the business may not have the staff for. Outsourcing provides a cost saving-strategy that is usually more affordable. Ultimately,

The case identifies struggle and problem faced by organizations outsourcing IT projects and allows us to ponder on how to manage outsourcing well.

There are many benefits of outsourcing that companies and countries seize to take advantage of. The biggest benefit is reduced costs of infrastructure and labor. According to the OneNeck IT Solutions, “The attraction to overseas outsourcing has traditionally been reduced costs. By moving support services to India or China, for

(Pearlson,2001). Cost is the most important factor when the enterprise make a decision of insourcing or outsourcing. If the company produce the products or service on its own, there are costs more than producing, which can include investments of researching, training, and equipment.The investment of insourcing can be a lot more than the outsourcing because of economies of scale.Outsourcing providers can gain significant savings from economies of scale, which client companies usually can’t get on its own(Pearlson,2001). This benefit could be magnified in IT outsourcing.In the case of Project Harmony, as a food company, Campbell soup was a lack of sufficient scale within their own IS departments and IT technical expertise, so the saving between outsourcing and insourcing was significant.To conclude, cost reducing is the first of core benefits of outsourcing due to economies of

The big tech companies already invested billions of dollars in IT infrastructure, for example Amazon has invested more than $5 billion with their Amazon Web Services division, and estimates revenues of $20 billion by 2020 . Outsourcing provides the capability to shift from a fixed to variable cost IT infrastructure, and only pay for the usage without making big hardware and software investments. Ultimately, the company must decide what should be in-house and what can be outsourced.

As reported by SupportWorld, “among organizations that outsource IT work, the percentage of their total IT budget going to service providers rose at the median from 6.1 percent in 2009 to 7.1 percent in 2010 and then jumped to 8.6 percent in 2012” (Thompson, 2013). These figures articulate to a rising trend in IT outsourcing where increased offshoring and/or outsourcing of services operations has altered the IT service customs from internal command and control of IT assets to IT service as a utility (Thompson, 2013).

Outsourcing is the contracting out of an internal business process to a third party organization. The term "outsourcing" became popular in the United States near the turn of the 21st century.(6) Outsourcing is big business today even for small businesses. Like every business decision we are faced with the advantages as well as the disadvantages of relocating part or all of a business. Outsourcing is one of the fastest growing trends in business as large-scale organizations have latched onto outsourcing due to the almost immediate savings and quality improvement. (1)

When outsourcing is done for the right reasons will actually help your company grow and save money and hence the advantages;

is the attempt of this paper to explain outsourcing , it's pro's and con's and

We have got to ask ourselves this question first - why do companies outsource? The bigger they are, the more likely they are to be geographically distributed. The more distributed they are, the more likely they are to outsource their IT requirements. The reasons are simple – local vendors, like Cognizant Technology Solutions or Tata Consultancy Services in India, are established players, incorporate industry wide best practices, operate on a large scale (which is exactly what the client company seek to achieve), possess expertise in varied technology domains and have stellar reputations for delivering quality IT services. More importantly, they offer cost reduction and efficient technology management.

It’s important that Triad assesses the pros and cons involved with outsourcing, such as cost/benefit, potential risks, contractual arrangements and service levels, and necessary controls, before making any changes. We should also define what operations we are considering outsourcing – as opposed to a company-wide reorganization and what other functions we might be able to add as a result of outsourcing MIS IT solutions. While traditional software solutions address the needs of one process, enterprise software, which we might consider for our MIUS needs, addresses multiple “thinking” processes – rather than a simple “tool.”

There are many reasons that companies provide for the determining factor for outsourcing. Some of these reasons include reducing costs, compensating for missing skill sets, improving quality, increasing productivity, avoiding tying up internal IT resources, expanding global capability, improving time to market, and allowing rapid response in resource demand. Savings from outsourcing have allowed reinvestment into onsite projects .

In 1973, a monumental shift was prevailing where U.S. companies were sending low skilled jobs within the manufacturing industry to offshore countries to reduce labor cost while maximizing profits. The effect of the jobless manufacturing work force was a shift of those laborers to focus on and perfect the service industry of what it is today (Koch 1). During the high tech recessions of the late 1990s and a nominal expansion of the present time, the Information Technology industry, an industry which through continuous innovations enabled the companies and corporations of America to become more efficient and productive, is also facing the outsourcing similarity with manufacturing. While outsourcing

The first one is the industry and the second one is the new technologies that become an important part of the core business of the firm. Following the external forces are the internal reasons that push a firm to outsource. Although many have been identified in the literature, the most relevant refer to reduction of costs, focus on the core business, avoid the investment in specific assets and increase in efficiency and performance. A ranking of these reasons is presented in Figure 2 (Pai, 2007).