System and Network Security Practices - Essay Example

6th May Outsourcing Introduction In efforts to meet the ever increasing demand for their products, many organizations have turned into using other firms to help them undertake some activities such as distribution, advertising, training of the workers and management of information technology among others. Peytons General Supplies, the organization I work for is considering offshore outsourcing of its three major projects. The projects include development and future maintenance of a new business critical IT system, human resource system and a non-business critical administrative system. The firm is not only interested in getting the right company to undertake the projects but also it aims at reducing the costs of the projects. As a senior IT Manager, my aim is to ensure that the company management team is aware of the benefits and disadvantage of offshore outsourcing in order to ensure that it makes decisions that are based on well researched information. Offshore outsourcing entails the practice of hiring an external company to undertake part of business activities in another country other than in the country where the major products or services are produced. Despite creating employment in foreign countries, the opponents of offshore outsourcing argue that it creates unemployment in the countries where the company is located. The four major kinds of offshore outsourcing include knowledge process outsourcing, information technology outsourcing, offshore software development and business process outsourcing (Wang 13). For any business activity to undergo offshore outsourcing, it must meet certain general criteria. First, the wage differences between the two countries must be significantly different. The job must be repeatable. The activity should be able to be transmitted via the internet. The job must be easy to set up. One of the major advantages of outsourcing is its swiftness and expertise. In most of the organizations, the outsourced activities are given to specialists who have extensive experience in undertaking the job. Additionally, the outsourced vendors have better equipment as compared to the organization outsourcing the activity (Stiglitz and Charlton 26). As the result of the expertise by the vendors, the services or products are provided in a faster rate without compromising their quality. The second benefit of offshore outsourcing is that it makes an organization to concentrate on core processes rather that dealing with the supporting ones. The firms being given the jobs mostly deal with supporting services thus allowing the outsourcing firm to deal with more important activities. As the result of concentration in critical duties, a company is able to produce services and products that are of high quality (Kerin 38). Offshore outsourcing also allows firms to share risks. This implies that when a company outsources some of the major activities such as the three projects by Peytons, it is in a position to transfer certain responsibilities to the outsourced firm. Related to the risks sharing, the outsourcing vendor assist the outsourcing company in planning the risk mitigating aspects thus reducing the costs of risk analysis for the company (Copeland 47). The fourth advantage of offshore outsourcing is that leads to reduced recruitment and operational costs. By outsourcing, a company eliminates the need to expand its work force by hiring more employees. As the result, the costs associated with new hiring including conducting of the interviews, training new workers and high wage bill among others. The reduction in the costs leads to high net profit that is essential in the expansion of the outsourcing firm. Despite being a major strategy that results to improved services and products for local and international firms, offshore outsourcing has various disadvantages. First, the possibility of exposing confidential data is high. For example, if a company outsources human resources and payroll services to other firms, it faces the risk of exposing the information to the third parties or to the competitors (Mankiw and Swagel 8). As a result, the company may lose its employees to the rival companies an aspect that may result to reduced productivity for the company. Secondly, outsourcing may lead to delays in delivering the products or services. Additionally, if close monitoring is not done, the outsourcing vendor may produce substandard products that do not meet the needs of the consumers. It is worth to note that delivery time, quality as well as designing of the brands can be effectively done in the organization itself rather than in the outsourced vendor. The third demerit of offshore outsourcing is that it has hidden costs. During the signing of the contract especially across international boundaries is a threat that may result into high costs that may offset the benefits of the entire offshore outsourcing. Offshore outsourcing may also result into lack of customer focus. This is based on the fact that due to the expertise of the outsourced firm, it may be doing similar business activities for many organizations. As the result, the outsourced vendor lack complete focus on the customer’s activities (Goldstein and Lee 19). Among the business functions that UK firms outsource in countries such as Philippines, China and India is the IT functions. Major factor that makes the three countries be the main destinations is the low labour costs that results to the increase in the company profits (Jacques 36). In order to ensure that the outsourcing firms in UK are in line with the government requirements of the outsourced vendors, they should ensure they are aware of the business laws in the destinations countries. For example firms that are focused at outsourcing their IT functions in India must be aware of the data privacy as well as intellectual property laws in India (Basu 26). Additionally, the companies should aware of the contractual rights being adopted in India and the dispute resolution procedures. In this way, they will avoid the conflict that may emerge between UK and Indian firms. Another notable aspect that UK companies should be aware of is the taxation system applied in India and other countries (Baldwin 17). Based on the fact that countries have different tax laws, any firm that is engaging India in its production or marketing among other activities must find out the implication of the country’s tax laws. In addition, UK firms must be aware of the rules of governance being adopted in the countries that they want to engage. This implies that the outsourcing firm and the outsourced vendor should emulate the two legal systems. Heterogeneity in tax system is thus a vital aspect that companies which are focused at offshore outsourcing cannot ignore. Apart from the legal issues, the UK firms as well as the offshoring countries must be aware of the environmental issues for example the way of dealing with the carbon emissions and waste water during the production process. Based on the increased number of factories globally, government in different countries have come up with various laws that focus at curbing carbon emissions (Kupchan 14). Thus, any UK firm that aims at using foreign companies in its operations must be aware of the environmental laws being adopted by the other country (Davis 13). This implies that a UK organization that intends to use the services of Indian or Chinese based companies must make changes in its legal processes. This means that the UK based firm needs to adopt the Indian laws during the period it is engaged with the Indian company. As mentioned earlier, before offshore outsourcing is done, it is important for the organization to consider compliances and rules which are applicable to particular countries. For instance in United States, China and Australia it is important to consider laws and how contract based project are done and how disputes are resolved in case they appear. For any organization to outsource to one of the country, it is important for the firm to consider the intellectual property protection since the property of the firm should be protected and conducive environment for the business to operate should be guaranteed (Allen 20). Offshore outsourcing for the development and future maintenance of a new business critical IT system which is outsourced in United States may be affecting the firm back where it is located. I consider one of major effect of offshore outsourcing is taxation since in United States failure to pay tax would result to the company being sold or enclosure since taxation plays a major role in development of the country economy (Dhillon 40). I think in the first place before a firm outsources it is important to find the tax implications that the firm will have to deal with since taxation in many of the countries are different and thus payment must be done. The second requirement that may affect the customer is influence of local laws for example in China (Quan 25) .If the laws of China are hindrance, it is best to find another outsourcing service provider. The laws of the country should protect the firm from civil penalties that may be intended for the business (Warner 19). Lastly another requirement that may affect offshore outsourcing in non business critical administrative system is how to settle disputes if they emanate in a country like Australia. For instance a customer from UK who wants to sue outsourcing provider who is in Australia means that either the customer or the outsourcing provider will have to go for the case that has been filed (Hofstede, 42). The two countries UK and Australia have different legal systems and thus it is important before outsourcing to consider how to resolve such a dispute which may occur to avoid problems. US is my preferred current single country that can undertake all the three projects. In order for Peytons to attain a competitive edge, it should adopt effective strategies that emulate high technology. Based on its advanced technology and innovation, US will ultimately make the three projects achieve their objectives thus making the company attain a sustainable profitability (Aneesh 23). Due to innovation, bandwidth growth and advanced telecommunication I can recommend United States to be considered to undertake all the projects (Aspray 45). For instance in offshore outsourcing for the development and future maintenance of a new business critical IT system United States is well known in technology advancement and in bandwidth growth and telecommunication. If a delay of five years is experienced, the three projects can be undertaken by three different countries. First, the development and future maintenance of a new business critical IT system can be undertaken by US due to the advanced information technology that US emulates (Hira and Anil 56). Secondly, the Human Resource system can be handled by China. This is based on the low labour costs and that China adopts implies that Peytons costs of operations will reduce leading to high profitability. Thirdly, the non-business critical administrative system can be undertaken by Australia. As the result of advancement in administration systems as well as innovation adopted in Australia, the country will effectively handle the project leading to the success of the company. Conclusion Based on the above discussion, it is clear that apart from adopting strategic marketing policies, firms can also increase their profits by outsourcing their operations. By ensuring that other companies are given the responsibilities of undertaking service operations, the outsourcing firm will have adequate opportunity to deal with its core duties. Despite the legal and environmental implications on the firms, offshore outsourcing has the advantage of low costs and increased profits, quality products due to the expertise of the outsourced vendors, and sharing of risks among others (King 56). On the other hand, offshore demerits includes exposing confidential information, delays in delivering services and products, hidden costs and lack of customer focus. 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