Essay: Outsourcing Benefits

By | April 28, 2011

Sample Essay

In my case, the organization I work for is an office product sales and marketing companies. The company has a significant IT infrastructure and use customized software for business process automation which have been developed in-house. This software requires constant modification due to the fast changing business environment that the company operates in, as well as to accommodate the change company’s strategic direction as well as change to the organizational structure. The company also has a large computer network which is used to share resource among different departments of the company.

In this case, the maintenance of computer hardware and network infrastructure does not contribute in providing the company a competitive edge; hence they can easily be outsourced to a specialist company. The company also spends a good amount of its budget in design and development of its customized software which are then utilized in its office to automate processes such as sales, purchase and warehousing, however, being a business, its processes have much in common with other types of businesses, hence the company also has the option of using a third party Enterprise Resource Planning (ERP) software instead of its in-house software. This would allow the company to free valuable resources that are dedicated to in-house software development as well as simplify the structure of the organization allowing the company to focus more resources on its central competencies (Dobosz, George, Heusser & Leidig, 2004).

Organization that take into consideration all the issue related to outsourcing and go ahead with it do it for a number of reasons. Many organizations outsource because they want to experience a significant cost cut. Others outsource so that they can better focus their attention on core competencies in order to gain business advantage. Hence the importance of outsourcing cannot be disregarding completely.  It is also a fact that Internet technologies are progressing fast and in the future the Internet will be able to provide an enabling infrastructure for organization that have outsourced their It services to access these service online. The Porter’s Value Chain model also seems to support this notion. According to Porter, a value chain is a chain of activities for an organization in a particular industry. This value chain is constructed at business level and a product pass through parts of the value chain, where it gains value at each step. Through outsourcing of IT services which are not business critical, an organization not only ensure cost-saving but also improved quality of the product that it gets at the end of outsourced process. This translates into Porter’s evaluation of value chain, whereby, access to outsourced IT services through the Internet not only allow the organization to save time on communication and collaboration activities, but it also cuts IT infrastructure cost, thereby adding more to the value of the product that requires IT services. Hence in this way allow the organization to experience significant business advantage even in a tightly competed business environment (Porter, 1996).

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