Cmmt 578 Week 2 Outsourcing Paper

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IT Outsourcing Week 2 Individual CMGT 578 Katherine Leigh Jason Breedlove August 5, 2013 The purpose of this paper is to discuss the various aspects of outsourcing the IT function of an organization. The factors for deciding to outsource as well as not to outsource will be discussed. The risks and benefits will also be discussed. The costs associated with IT outsourcing contract will be discussed along with the implications to the business organizational structure. Factors For Outsourcing There are various reasons a manager may consider outsourcing the Information Technology (IT) functions to a vendor outside the organization. One of the factors that may lead to the decision to outsource is to allow the organization to focus on the…show more content…
The contracting of the entire department or even a single task to an outside vendor translates to the turning over the management and control of the function to another company. Another reason to not outsource, is to avoid the additional possible security issues that comes with turning your information over to an outside vendor (Bucki, 2012). Risks Associated With Outsourcing When outsourcing to another company there are various risks that come with this process. One risk can come in the form of quality issues. The vendor will be function in effort to make a profit as is with all businesses. The problems can come when the vendor needs to increase profit and since the contracts are normally a fixed price, the only way for them to do so is to decrease expenses. This is a viable option as long as they meet the conditions specified in the contract (Bucki, 2012). When outsourcing to another company, your organization is now tied to the financial well-being of the vendor. The problem can arise when after contracting out the IT functions of the organization and paying the fees negotiated, the vendor goes bankrupt leaving the companies who have contracted to them without an IT resource (Bucki,…show more content…
When deciding to outsource, there are risks such as quality issues, security issues and personnel issues. There are also various benefits to outsourcing such as the ability for the staff to focus on core related business functions. The vendors normally have access to better technology that would otherwise only be available with a large investment by the organization. Costs associated with an outsourcing agreement are primary, secondary and incremental. The implications of outsourcing for the business can be to strengthen the business structure or can lead to a weakness. Issues that are not usually considered with outsourcing can be with personnel having to work with multiple contractors which can lead to
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