Outsourcing Case Study

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The rising popularity of employing outsourcing firms for various IT processes has consequently caused technology companies with the dilemma of whether or not to utilize outsourcing for their projects. Risks can originate from various sources and affect many aspects of business operations of a company that has sought outsourcing. Companies typically opt for outsourcing when supply for a particular set of resources is scarce or not capable of meeting demanded requirements. For example, companies hire outsourcing staff that are theoretically expected to be highly knowledgeable and proficient in a particular subject. However, there is the risk that the expected expertise could be invalidated due to hiring a staff without properly verified qualifications.…show more content…
A client company might be visioning that an outsourcing provider is using state-of-the art equipment and robust systems, but, in fact, an obsolete infrastructure and legacy systems might be used. Consequently, repetitive misunderstandings and clarifications could needlessly prolong completing a project, increase resource expenditures, or deliver a project with insufficient requirements, which are all potential risks as well. Controlling and monitoring of a project is a valuable phase during any project life cycle since it provides opportunity to collect information on how a project is progressing and whether it is traveling in the right direction. As a result, a client company risks access to this information since it belongs to the domain of an outsourcing provider. On the other hand, risks for an outsourcing provider not protecting a client company 's proprietary information or failing to maintain vigilant security over a company 's confidential documents and data due to weak security measures are also likely to be…show more content…
Next, a client company needs assurance that an outsourcing provider is prepared for recovery after a disaster and to restore operations within a reasonable period of time. A client company needs to review, via a third-party firm, an outsourcing provider 's backup capabilities, recovery procedures, level of data redundancies, and functionality of alternative worksites in case of environmental hazards. Also, an outsourcing provider should be verified for having a disaster notification system to relay status updates so that a client company can receive early warning signals. The key strategy for risk mitigation is to have communication channels that are always open and transparent between a client company and outsourcing provider for monitoring and resolving conflicts cooperatively. In conclusion, while optimism gained from viewing benefits of outsourcing can be a motivating factor for a company, it is more prudential for a company to identify and evaluate the risks of outsourcing, and then define a risk management plan to counteract or mitigate each of the
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