Outsourcing

Outsourcing is when an organization decides to pay another company to run part of their business such as technology related issues such as IT help-desk. Outsourcing doesn’t always have to be referred to technology, but can also be referred to a non-technical business such as running the customer service of the telephone based division. (centerworld.com)

There are three types of outsourcing, onshore outsourcing, nearshore outsourcing and offshore outsourcing. Onshore outsourcing is when the organization is doing business with another company in the same country. Nearshore outsourcing is when the projects of the organization is being conducted in another country but on the same continent. An example would be that the organization located somewhere in the U.S. outsource their activities to another country either in Mexico or Canada would be called nearshore outsourcing because the companies are all located in the North America continent. Offshore outsourcing is when an organization outsource their projects to another company in another continent such as India. (offshoringtimes.com)

There are many factors that organizations will precede to outsourcing and saving money is one of the major factors. Organizations mainly focus on getting ahead of the game and outsourcing part of their business projects to a third party that is already doing similar work to another company can be cost effective. The reason for organizations can save money by outsourcing their non-critical and non-core projects is because the labor cost might be lower and the costs of living might be lower in different countries. This will help organizations to utilize their employees to focus more on the objective of the business instead of doing busy work.

There are a lot of issues to consider before outsourcing a part of the operation to another company that managers may not want to consider outsourcing. Effective management is very critical to organizations and making sure that there is a well thought out executive plan to be able to manage the outsourced company. Sometimes outsourcing projects without planning it out thoroughly can take a turn for the worse rather that getting ahead of the game.

Some of the risks associated with outsourcing the IT function is that it will expose other countries to many different types of risks such as political instability, regional turmoil, unstable economies, poor infrastructure, lack of exposure to the business culture, and data insecurity.

Data insecurity is one major issues that organizations fear the most. They fear about whether their data that is being sent over through the internet or other form would be misused.

I’ve always been on the other side of outsourcing and most of the time, it has not been good. My most recent experience was dealing with my DSL connection at home. I placed a call into the phone company requesting to have someone come out to my house to fix my internet. The phone company outsourced their IT support to other countries and transferred my call to a tech support representative in India. After troubleshooting for an hour and a half with no success, the tech just told me to turn off my computer and turn it back on in a couple of hours. Obviously that didn’t work, so I called the phone company again requesting a tech to come out to my house and again they transferred me to the tech support in India to go through the process of trouble shooting before they could send someone