IT Outsourcing Flexibility Issues - Essay Example

Information technology processes are primary among those outsourced as they call for expertise and can dramatically boost the brand image of a company. Since outsourcing has long been taken on as a cost-cutting strategy, companies will want to identify services that can be hired experts to perform them. Moreover, outsourcing enables companies to achieve flexibility as they can take advantage of time differences as the companies hired out are usually overseas. Besides that, where a company is facing great demand during peak seasons, they can meet this demand by hiring out manufacturing processes to overseas companies with the expertise. This is quite beneficial to a company as it gives them an edge over their competitors in terms of surprise availability and the ability to meet consumers’ requirements consistently (Blokdijk, 2008).

Concerning IT, a service value chain can be achieved by for instance where companies approaching a company to provide storage through cloud computers and provide applications that streamline operations using customized software. The most sought-after is web hosting services, there are risks attached to this that will require deep consideration and analysis. These are related to the vendors, such that their being in the driving seat allows them to take control of operations. This could result in a conflict of interests, a company may lose its identity while associating with certain vendors, managing and directing vendors may prove challenging and when the outsourcing company decides to end the partnership with a vendor, critical knowledge goes with the vendors which may prove risky and expensive as they will be vulnerable to competition (Kroenke, 2012).

Hence, companies must establish fundamental principles when making a contract with vendors or suppliers of IT services. This ensures there is a meeting of minds allowing a cohesive and mutually beneficial relationship to exist. However, this should not be done in a dictatorial manner as it may build reluctance from the vendor. The buyer should notify the vendor what the expectations are so that the vendor understands the obligations faced by the company. Before this, a company seeking to outsource IT services should do a thorough background check on potential vendors or suppliers to make certain they are reliable and competent to perform the services. This prevents a situation where the quality of service from the vendor is below par. An outsourcing company should also be careful not to entirely expose its intellectual capital, in form of skills and knowledge, to the vendors as this may prove damaging if accessed by the competition (Blokdijk, 2008).

From the mini-case study, it is understandable why management would want to outsource IT services seeing as it should support 5,000 students, excluding staff and they have an accommodating budget. Nevertheless, having an extra 15 employees, over and above the 30 employees, all dedicated to the same business function may prove expensive and redundant. The university needs to rationalize the outsourced services to ensure they maximize capital utilization, where capital in this case refers to existing employees. In addition, the associated costs of outsourcing services should be supported by quantifiable benefits accrued from the services. It would be sensible to outsource IT services in a transitional way, where existing employees could be trained on a new application that brings efficiency, to the outsourced company. This eliminates redundancy and moderated costs are realizable. In the end, outsourced services should be kept at the level of support, which can be executed remotely.

In a university scenario, IT services are important when handling complaints from students and handling transactions with them efficiently and satisfactorily. In the same way, staff must feel that they can carry out their duties with ease and their queries and complaints dealt with in time. This can be the main rationale for outsourcing such services but these may be difficult to quantify when defending such a strategy to management. Having a system that allows both students and staff to provide feedback and suggestions can be the quantifying factor although. Consequently, customer service becomes the main reason for outsourcing IT services as the university can focus on its central functions and have an outsourced company carry out this function (Blokdijik, p.33).

Overall, when outsourcing IT services it would be better to seek their infrastructure as opposed to management where for example, a consultant is brought in to manage and direct employees. The latter is detrimental as the consultant will not be concerned with the bottom line and they may have bureaucratic procedures that impede the productivity and morale of employees. Acquiring infrastructure allows for talent development in employees thereby, promoting retention. If vendors increase their prices due to increased demand, a company can exit the partnership knowing that its employees have the relevant knowledge and skills, and willingness to continue with the infrastructure. It thus becomes practical to fulfill customer expectations continually.