5.1 Outsourcing

Question 1

Define Outsourcing

Answer 1

IT work is done by a third party

Question 2

What are the different versions of outsourcing?

Answer 2

Consulting companies or vendors
Shifted off site to another company
Leased services
Cloud services or SaaS (Software as a Service)

Question 3

What are the outsourcing options

Answer 3

Outsourcing ‘storage and backup’ of data
Applications development
Managed services

Question 4

What are the Vendor Selection factors?

Answer 4

Commitment to quality
Price
References / reputation
Flexible contract terms 
Scope of resources
Additional value - added capability
Cultural match
Existing relationship
Location
Other

Question 5

How does outsourcing work for a small business?

Answer 5

Difficult to justify cost of hiring 1 or 2 technical people to support ICT needs
Don’t have workload for full time person, leading to boredom, unnecessary technical evaluations and staff retention issues

Question 6

How does outsourcing work for a large business?

Answer 6

Pass the essential, but mundane (dull) operations to outsource partner (e.g. network manager & server operations)
Use outsourcer for specialised skills they don’t have in-house and only need such skills occasionally

Question 7

What are the reasons FOR outsourcing?

Answer 7

Reduce and control operating costs
Improve company focus
Gain access to world class capabilities / expertise
Free internal resources for other purposes
Necessary resources are not available internally
Accelerate reengineering benefits
Function is difficult to manage internally or its out of control
Make capital funds available
Share risks
Cash infusion
Speed

Question 8

What are the reasons AGAINST outsourcing?

Answer 8

Loss of control, particularly of quality and knowledge
Regulations
Who's fault is it? - loss of reputation
Hidden costs
Security risks
Things get lost in translation
Ethics: staff growth
Shirking
Vendor lock in
Failure to deliver on promises
Lack of training
Lack of documentation and specification