Outsourcing Strategies
Introduction
A small number of organizations function totally independently. As an alternative, organizations form partnerships with suppliers and contractors. Outsourcing permits organizations to conduct business in a more efficient and effective manner. While outsourcing is beneficial to an organization, knowing when to outsource and even describing outsourcing can be a challenging issue. Organizations can choose various tasks for which they wish to outsource. Organizations can outsource a single section of their routine operations, or they can set up outsourcing as a calculated part of their business (Vagadia, 2012).
Question Phase Motivation
The bank in this case decided to outsource for various reasons. The reasons included migration from a legacy technology structure, the necessity to incorporate an application to deal with the Y2K issue, “hardware and software assessment, cost reduction inefficiencies, [and] improving access to new telecommunications technology,” (Baldwini, Irani and Love, 2001, p.19). There was also a need to outsource in order to guarantee the realization of a bigger capacity for the enterprise.
Initially, the business operations were characterized by levels of technology access that were unsatisfactory; in addition, direct costs kept escalating as well as expenditure on telecommunications (Deering, 2015). The direct costs consisted of preliminary hardware overheads on telecommunication gear, preliminary software costs (together with networking software), setting up and configuration costs (together with executive consultancy, maintenance networking costs), setting up of connections wiring junction and connector conservation costs. Other costs included hardware costs which were caused by upgrading, in addition to adaptation courses. All these costs kept on rising, and there was a need to contain them in order to allow for efficiency.
According to the bank, the level of technology that was anticipated in the corporation (especially in voice service delivery and high-speed bandwidth) were not what the connections merchant supplied. The charge of voice communication had risen sharply, and it was anticipated to go beyond the £100 million mark (Baldwini, Irani and Love, 2001).
The risk involved was due to the bank’s risk-averse culture, which was replicated in its resolution not to contract out an exceptionally miniature segment of their IT/IS services, which included security, maintenance, architecture/design and premeditated setting up. On the other hand, the bank made a decision to contract out other IT/IS production roles, which incorporated applications progression, disaster recovery, operations, asset supervision and communications. The understanding of the people who were involved in the decision making brought out actions that replicated the bank’s business-wide intentions and plans.
Considering that the banking industry was in an aggressive, information-demanding business, the intent of the bank should have been to provide viable banking services by using technology that is up-to-date. However, technology was beginning to change very rapidly for the banking industry. Therefore, it was important to make sure that the bank did not only have the most up to date technology available but also technology that was quick to respond to slight adjustments.
Conclusion; Linking and Emphasis of Material
The bank faced many challenges in its venture to outsource (Drahokoupil, 2015). Matters on outsourcing not only got complicated in the decision-making process, but also affected the cost saving issues over more business-wide benefits. However, time has accorded the bank an opportunity to improve on its outsourcing struggles. The level of maturity in outsourcing has therefore improved, and short term outsourcing is becoming more favorable.
Bibliography
Baldwini, L.P. Irani, Z. and Love. P., 2001. Outsourcing information systems: drawing lessons from a banking case study. European Journal of Information Systems, 10, 15-24.
Deering, A., 2015. Outsourcing strategies, challenges and effects on organizations. Hauppauge, NY: Novinka.
Drahokoupil, J., 2015. The outsourcing challenge: Organizing workers across fragmented production networks. Brussels: European Trade Union Institute (ETUI.
Vagadia, B., 2012. Strategic outsourcing the alchemy to business transformation in a globally converged world. Heidelberg New York: Springer.
