Planning for Information Technology Outsourcing

Subject: Strategic Management
Pages: 6
Words: 2187
Reading time:
9 min
Study level: PhD

Abstract

Outsourcing may seem to be an extremely advantageous course of action in light of the current economic recession that is prevailing globally (Sparrow 2003), but if the appropriate measures are not taken before the actual process of outsourcing is initiated; the consequences of the outsourcing may turn out to be not as favorable as they may have been expected.

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For a firm to carry out successful outsourcing, the company goals, objectives, and visions must be kept in clear sight when planning towards outsourcing (Cullen & Willcocks 2003). It is also just as imperative that the management throughout the firm is in unanimous agreement and has been convinced of the benefit that the outsourcing solution can bring to the firm. The contract has to be structured with meticulous attention being given to the short term and the long term financial justifications (Halvey & Melby 2005). These measures are generally taken well before program initiation ensues. Only once such concerns have been met does the outsourcing planning phase move towards the implementation of the service, the final agreement, and the closure of the program (Sobh & Elleithy 2006).

Introduction

Once the industrial revolution had passed, firms began to direct their attention towards methods that they could use to expand their competitive advantage to increase their markets and in turn their profits. Extensive integration was once considered to be a sure-fire formula for success became the center of criticism (Halvey & Melby Information technology outsourcing transactions: process, strategies, and contracts 2005). By the middle of the twentieth century, firms began to realize the significance of economies of scale and the benefit that they could yield. Multiple layer management took on a form more concrete than it had ever been in as organizations began to make plans to begin outsourcing.

The objective of this research study is to establish a sound knowledge of the practices that pertain to the planning phases of the outsourcing of Information Technology. This research would include the factors how companies decide the feasibility of outsourcing; what measures they adopt to bridge the inevitable gap between expectations and reality; what factors to take under consideration for choosing ideal vendors for outsourcing; and how to integrate own business processes between the company and the outsourced company. This research study will serve to single out the trends that have come to pass and that can be expected to come forth by a thorough analysis of the previously performed research and the present methodologies that are perceived.

Relation to previous research

Outsourcing may have become an option that is being adopted by organizations with much higher frequency now than it was being before; however, the need for successful and productive outsourcing has led to the development of numerous methodologies that are implemented before the actual process of outsourcing begins (Tho 2005). These planning techniques are designed to allow a firm to identify the departments that merit outsourcing and the degree to which the operations of such departments should be outsourced.

Concerning specifically outsourcing Information Technology needs, the scenario takes on an even more complex form because of the technical intricacies that are associated with Information Technology. In a case such as this, the degree of technical expertise that the outsourcing destination holds and any opportunity cost that the firm shall have to pay becomes all the more necessary to analyze before any outsourcing can be done.

It is essential to highlight here that outsourcing should not be confused with subcontracting in any manner since outsourcing incorporates the aspect of significant restructuring of business activities on the part of the firm that is choosing to outsource whereas subcontracting requires that the organization has to perform almost no restructuring at all (McIvor 2005). It was not until the latter half of the twentieth century that outsourcing was formally recognized as a strategy that could assist firms in saving and making more profits (Hira 2005).

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Firms that had no internal competence in a particular area but required the related services, all the same, began to actively seek out their options for outsourcing (Bragg 2006). Almost immediately firms began to outsource their accounting, human resources, data processing, internal mail distribution, and security needs to cut costs and companies began to emerge to deliver the much-demanded outsourcing solutions (Greaver 1999). The core of the concept was that it was not necessary to own a resource anymore if specialized benefits could be attained at lesser long-run costs. The core product became this particular relaxation that outsourcing offered (Burkholder 2006).

Of course, where outsourcing has helped many companies exactly what has been mentioned below, it is also a source of dilemma for others. Outsourcing requires a business to trust an outsourced company to do exactly as the business wants. This is hardly ever possible. Furthermore, in an Information Technology business, information is confidential and hacking of any such information may prove disastrous for the company. Thus organizations often fall into the dilemma of wanting to lower their costs while protecting their confidentiality.

Proposed methods

The research methodology that is used in research serves to establish the fundamental perimeters of that research and therefore serves as a measure of the overall credibility of the research (Kothari 2005). This degree of significance of the research methodology is defined by the fact that the research methodology serves to determine the nature of data that is to be used in the research as well as the methodology that will be implemented in the analysis of the data (Ketchen & Bergh 2004). The research methodology also serves to establish the sources through which the data will be gathered and the instrument through which it will be gathered.

In the case of this particular research study, the research methodology has been designed to facilitate the determination of the scope of the research. To do so, the research study takes its roots in the formation of a foundation through research that has previously been performed in the subject area (Goddard & Melville 2004). This section shall form the literature review of the research.

The secondary research shall incorporate a literature review which is meant to provide a comprehensive account of the current theoretical perceptions that are present on the subject of the planning procedure that should be adopted with concern to outsourcing of Information Technology. In this regard, the literature review shall also serve to establish the themes, the degrees, and the gradients that will be brought into use in the later stages of the research.

The sources for the secondary research shall include books and journal articles alongside other peer-reviewed publications to ascertain the credibility of the secondary research. To provide an accurate picture, it shall be ensured that sources that date back to no more than five years are used in the secondary research.

Once the literature review has been performed, the research shall move on towards the accumulation of primary data through the chosen research instrument. The chapter of the dissertation that elaborates upon the research methodology chosen shall highlight the numerous research instruments that were available to carry out the primary research and the reasons because of which any particular research instrument shall be chosen. Primary research will be conducted through interviews taken from at-least three company heads in the city involved in outsourcing their operations. To gauge the efforts of the employees and the level of effort involved in outsourcing, some of the company employees will also be asked to fill out questionnaires. These three companies will provide a base for comparing the literature and the reality thus more a realistic picture can be presented.

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This form of research methodology shall be used to use the literature review as a source to acquire a foundation of the working knowledge of the trends in the planning phases for the outsourcing of Information Technology, while the research instrument shall be implemented to acquire knowledge of the current form that the trends have taken. In this regard, the data collected from both sources shall be analyzed and compared to heighten the degree of accuracy of the research.

The dissertation has been divided into a total of five main chapters. Each chapter shall include subheadings and shall reflect upon the subject of the research by contributing to it:

  • Chapter 1: Introduction
    • Introduces the background to context. The chapter will serve to decide upon the objective, project aim, research questions, and scope of the research and structure of the report.
  • Chapter 2: Literature Review
    • Identifying and discussing literature and previous studies related to Information Technology Outsourcing and developing grounds for the current research.
  • Chapter 3: Research Methodology
    • Underlining various research methodologies suitable for the current project and selecting the most suitable research approach and highlighting the sources for data collection that are used for this project.
  • Chapter 4: Findings & Observations
    • Presenting findings and observations extracted from the primary and secondary research.
  • Chapter 5: Conclusion & Recommendations
    • Drawing conclusions, limitations of the current research and finally making recommendations from the research carried out.
  • Reflections

Research Limitations

Before the research can ensue, it is essential to give regard to the limitations that will be present during the research and analysis process. For instance, it is essential to note that a limitation of funds shall exist about the number of funds that can be channeled towards the research. However, this is not as significant a limitation as to the fact that any biases or prejudice that may exist in the perceptions of any of the participants who are approached and invited to be involved in the research may obstruct the accuracy of the primary research results.

Similarly, the interpretational traits of the researcher may also have a certain degree of influence upon the results that are obtained from the research. The literature review shall span several different secondary sources and regardless of the significant contribution that they will be making to the research, it is important to realize that certain limitations may have been present at the time when the researches forming the secondary sources were carried out and that there exists a plausibility that these limitations may translate into effects that may influence the eventual outcome of the research.

Ethics Statement

The research shall initiate only once the absolute acknowledgment and approval for the research has been granted to me by my Tutor. At all times during the research, all copyright about plagiarism shall be adhered to rigorously.

Any participants who are to be involved in the research shall be approached only once the written permission to do so has been provided by the Tutor and any information acquired from the participants shall be kept confidential and shall be used for the sole purpose of research.

This research is not however meant to be meticulous and even though the highest possible degree of care shall be taken in the preparation of the report, it is advised in light of the limitations that the results obtained from the research are not used during the formulation of any decisions.

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The research shall be distributed only on the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out, or otherwise circulated on a commercial and/or non-commercial basis without the consent of both researcher and the instructor.

Conclusion

The research study shall hinge on the hypothesis that planning for the outsourcing of Information Technology is extremely essential for a firm and that if this is done without an appropriately implemented planning phase the benefits of the outsourcing strategy are lost entirely.

To test the research hypothesis, the research shall incorporate an attempt to provide answers to the following questions.

  • What are the origins of the outsourcing of Information Technology and how is it viable to organizations?
  • How has planned for the outsourcing of Information Technology evolved?
  • Which regions are heavily involved in the outsourcing of Information Technology and what methodologies do they implement when planning to do so?

However, these are not the only specifics that the research shall be covering since the literature review shall be given the liberty to extend to other similar areas of the subject that can prove to be of assistance in the testing of the hypothesis.

Timetable

The research shall be submitted by the following schedule.

  • Chapter 1: Introduction – 11 September 09
    • Exploratory Research – 8 September 09
  • Chapter 2: Literature Review – 14 September 09
    • Identification and Selection of Journals and Periodicals Articles
    • Data extraction and summarization
  • Chapter 3: Research Methodology – 21 September 09
    • First Interview – 15 September 09
    • 10 Questionnaires – 15 September 09
    • Second Interview – 16 September 09
    • 10 Questionnaires – 16 September 09
    • Third Interview – 18 September 09
    • 10 Questionnaires – 18 September 09
    • Data Collection from Interviews – 20 September 09
    • Data Collection from Questionnaires – 20 September 09
    • Data Compilation – 20 September 09
  • Chapter 4: Findings & Observation – 28 September 09
    • Use of statistical tools
  • Chapter 5: Conclusion & Recommendations – 5 October 09
  • Final Report Submission – 12 October 09

References

Bragg, S. M. (2006). Outsourcing: a guide to… selecting the correct business unit…negotiating the contract…maintaining control of the process. John Wiley and Sons.

Burkholder, N. C. (2006). Outsourcing: the definitive view, applications, and implications. John Wiley and Sons.

Cullen, S., & Willcocks, L. (2003). Intelligent IT Outsourcing: Eight Building Blocks to Success. Butterworth-Heinemann.

Goddard, W., & Melville, S. (2004). Research Methodology: An Introduction. Juta and Company Limited.

Greaver, M. F. (1999). Strategic outsourcing: a structured approach to outsourcing decisions and initiatives. AMACOM Div American Mgmt Assn.

Halvey, J. K., & Melby, B. M. (2005). Information technology outsourcing transactions: process, strategies, and contracts. John Wiley and Sons.

Hira, A. (2005). Outsourcing America: what’s behind our national crisis and how we can reclaim American jobs. AMACOM Div American Mgmt Assn.

Ketchen, D. J., & Bergh, D. D. (2004). Research methodology in strategy and management. Emerald Group Publishing.

Kothari, C. R. (2005). Research Methodology: Methods & Techniques. New Age International.

McIvor, R. (2005). The outsourcing process: strategies for evaluation and management. Cambridge University Press.

Sobh, T. M., & Elleithy, K. (2006). Advances in Systems, Computing Sciences, and Software Engineering: Proceedings of SCSS 2005. Springer.

Sparrow, E. (2003). Successful IT outsourcing: from choosing a provider to managing the project. Springer.

Tho, I. (2005). Managing the risks of IT outsourcing. Butterworth-Heinemann.