Outsourcing

With the power of telecommunications and internet connectivity, organizations today are able to create wide area networks (WANs) over vast distances – nationally and internationally. Using this technology, the organization is able to outsource any part of the organization’s information technology (IT) operation. This paper will discuss outsourcing – the benefits and costs.

Benefits and risks

Organizations may have any number of reasons for considering outsourcing – saving on labor costs, political alliances, new marketplaces, or lack of qualified local staff, just to name a few. The organization must also be aware of the pitfalls associated with this decision – quality of service, data security, insurance coverage, and legal liabilities. (Pozzi, S. 2006)

While many of these risks may be covered with a contract, unless all the potential risks involved are covered and the scope of the contract is clearly defined, the outsourced task may not result in a cost saving and when considering the language and social barriers as well as the time differences, the contract may become difficult to manage. The outsourcing organization must be carefully selected and researched and should the organization be located in another country, laws and regulations must be researched and followed. Pozzi (2006) states, “Outsourcing contractors must meet U.S. and foreign mandates relating to privacy legislation and public disclosure laws, such as the Sarbanes-Oxley Act.” Any loss of personal data through an outsourced company would result in a litigation aimed at the organization rather than the outsourced company.