Ict - Outsourcing And Offshore Provision

Front 1

Reasons for outsourcing

Back 1

-Improved quality
-Staffing issues
-Capacity management
-Cost benefits
-Economies of scale
-Reduced development time
-Improved risk management

Front 2

Improved quality (reasons for outsourcing)

Back 2

The service company will be specialists in the functions they are offering, providing a service that may be too difficult or time-consuming to develop in-house.

Front 3

Staffing issues (reasons for outsourcing)

Back 3

The service company would have access to a range of staff and can allocate the work to the most suitable people. The service is always available and is not going to depend on whether an individual employee is off sick as it might in a small business situation.

Front 4

Capacity management (reasons for outsourcing)

Back 4

The level of service needed by the organisation may differ monthly depending on how much work they have and the work they are doing. They can buy in extra service levels when they need it without employing new staff who may not be needed all of the time.

Front 5

Cost benefits (reasons for outsourcing)

Back 5

outsourcing should reduce the overall cost of the service to the business. Employing people requires more than wages/salary, it includes any insurance, holiday/sick pay and these costs are saved if work is outsourced. Similarly, specialist equipment, like large sized scanners/printers can be expensive and may not be used very often so it may be cheaper to use a company that has the equipment in place already.

Front 6

Economies of scale (reasons for outsourcing)

Back 6

If a company produces a very large quantity of something, or does similar tasks over and over again, it is likely that the cost per unit will be lower than in a smaller operation. For example a small or medium sized business may find it quicker and cheaper to use a bulk printing service for routine documents such as payslips and bills than it is to print them in house. The data will be transferred to the printing company via EDI, who will print and mail the document to the required recipients.

Front 7

Reduced development time (reasons for outsourcing)

Back 7

Buying an additional capability and capacity as it is needed may mean that an organisation can get a new product to the market more quickly then if they tried to do all the work themselves.

Front 8

Improved risk management (reasons for outsourcing)

Back 8

Using specialist, for example, to advise on data backup and recovery, may reduce the risk for disastrous data loss.

Front 9

Offshore Provision

Back 9

In certain circumstances it may be beneficial for an organisation to use a service provider that is not based in the UK or to move certain parts of their own operation abroad.

Front 10

Benefits and limitations of offshore provision

Back 10

- Labour facilities may be cheaper abroad
- Specialist skills may already be available, again at lower costs
- Some countries may offer financial incentives to encourage new business
- Jobs and investment may be extremely valuable to the local economy
- Provides work to the less wealthy areas of the world
- Language and cultural differences may cause difficulties
- Higher communication costs
- Legislation may differ abroad so it’s important to ensure no breaches occur
- Moving away from local control gives security risks