RBS computer failure 'caused by inexperienced operative in India'

Introduction This is about computer failure of Royal Bank of Scotland (RBS) that happens in India. It is said that it happens because of “inexperienced operative” by Indian staff when doing software upgrade. It is also a blame that the problem occurs because of outsourcing. But, it has been opposed by Stephen Hester, the chief executive of RBS. However, it is already happen and the company needs to responsible to what had happen. The company has to bear losses from 17 million customers that are more than 100 million transaction and all the losses is cost up between £50 million and £100 million. Nowadays, many large companies are using outsourcing through IS/IT sector in order to gain benefits to their company especially reducing expenses. it also to ensure that the company can focus on their core business and give other operation to outsourcing company that is expertise on the field.

Question 1

Critically evaluate the competitive advantage that can be gained by companies through IS/IT outsourcing. Provide suitable example to support your answer. Comparative advantage is when a company or country can produce a product or services at the lowest opportunity cost compare to their competitor. Meanwhile, outsourcing is when one company outsourced their portion of work or job to another company that are more expert and experienced to handle the task. Nowadays, almost every glorious company outsources their portion of work or job in order to gain competitive advantage. There are several comparative advantage that can be gained by companies through IS/IT outsourcing. One of the comparative advantages is to reduce labor cost. Most of large companies outsourced their portion of job to another company or country in order to reduce labor cost. With that the companies can save a large amount of capital and generate more revenue. It has been proved because the