Information System Through Outsourcing

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Information System Through Outsourcing   

It is one kind of information system developing in the organization. If the organizations are unable to develop their own information system by any cost, they often approach to have an information system facility from the outside organization. In other words, if the firm does not want to use its own internal resources to build and operate information system, it can hire external organizations that specialized in providing these services to do the work. The process of turning over an organizations computer center operations, telecommunications networks, or application developments to external vendors of these services is called outsourcing. This outsourcing information system can be classified into different ways. Today, many of the organization, in particulars small and medium scale firms have been adopting the outsourcing facilities in all aspects. Therefore, the categories of these outsourcing may be differs from context to context. But, in terms of information systems model it may classified as four categories. These classifications have been made based on the two criterions. That is:

1.    Degree of risk involved with outsourcing facility.
2.    Efficiency and effectiveness of information system

If these two criterions applied into a grid, we can identify the four quadrants, and each quadrant represents a classification of outsourcing. see the which illustrates the grid and classifications of outsourcing.

Outsourcing Classification Grid

1.    Strategic Outsourcing

Need and efficiency of the information system is more from the outsourcing process. In this both the effectiveness and risk from the sourcing organization are too high. This kind of outsourcing deal is called strategic outsourcing. Majority of the organization uses this kind of strategic outsourcing for there IS development. It is shown in the first quadrant of the grid.

2.    Desired Outsourcing

It is the second quadrant of the grid, where the risk from outsourcing organizations is less and high in effectiveness of IS. Therefore, it is desired out sourcing. If any organizations are unable to go with their own system, this kind of desired outsourcing can do much more effort to the organization.

3.    Temporary Outsourcing

It is placed in the third quadrant of the grid. Where the degree of risk from outsourcing is very high and need and effectiveness of information system is low. Therefore, organization cannot retain long-term relationship with outsourcing facility in the information system. It is temporary agreed outsourcing approach.

4.    Nominal Outsourcing

Both risk and effectives are low, placed at quadrant four in the grid. This is nominal outsourcing because, benefit of outsourcing and as well as risk from outsourcing are too less. Therefore, it is nominal out souring.

Outsourcing ahs stared in India after long time; however, companies cannot blindly follow the rules of the West, mainly because the Indian scenario is pretty different. The cyber media publication DATAQUEST conducted a survey on outsourcing by picking-up of 21 CIOs of reputed organization, on what is the CIOs view on the future evolution of the model.

Benefits and Risks of Outsourcing

As a service provider, the outsourcing model of IS development has got both befits and risks. Let’s refer these from the following paragraphs.

Benefits of Outsourcing

1.    Cost Effective: Outsourcing providers are specialist in the particular technology and information system developments. Instead of spending huge amount for own developed system, the organization looking towards specialized vendors for getting such facility. It is some time possible to reduce 15 to 30 percent of the cost from the total expednditure of IS development cost.

2.    Qualitative Services: The users can get qualitative services from the specialist vendors. Because, they are specialized people to offer an effective services.

3.    Flexibility: It is one of the characteristics of outsourcing services. Higher the flexibility there is easier to adopt the changes therefore, flexibility can support as one of the benefit by the outsourcing.

4.    Run the Organization with less Human Resource: Instead of engaging with more number of employees in the process of information system, by consulting with the outsourcing services they can reduce the costlier and valuable human resource more effectively.

Problems of Outsourcing

All the organizations cannot obtain these benefits of outsourcing; it may create serious problem some times in the process of outsourcing facilities.

1.    Loss of Control: When firm handed over the key information system, it has become serous issue in the control of the system to the host organization.

2.    Trade Secretes can’t be Guarded Properly: All the information has handle by the external vendors; therefore, it is most questionable in the matter of guarding the trade secretes.

3.    Dependency: The firm becomes dependent on the viability of the vendor. A vendor with financial problems or deteriorating services may create service problems for its clients.

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