Outsourcing Services – Risks And Advantages

Outsourcing Services – Risks And Advantages

Outsourcing non-core activities represents an essential preoccupation of every modern IT company. But, as IT companies consider the vast positive aspects and allure of IT services outsourcing, they must balance the risks and issues with the potential for labor arbitrage (the economic phenomenon where jobs move to countries where labor and the cost of doing business is inexpensive).

Advantages

  • Save money: Organizations that decide to outsource IT services, whether offshore or through a nearby service provider, transform fixed expenses to variable ones, liberating up capital for utilization in other areas.
  • Focus on Core Operations: Outsourcing IT services enables you to pay attention to the core capabilities of your company.
  • Having IT resources near those of big companies: Outsourcing IT systems and services creates a more reasonable playing field between small firms and large organizations.

Risks

Purchasers of outsourcing services must seriously consider risk. The results are often included in the outsourcing contract. Because many IT companies outsource their infrastructure to cloud suppliers, a Service Level Agreement is an essential topic. According to IBM, a Service Level Agreement “defines how the consumer will use the services and how the provider will deliver them”. I recommend you to read further about this topic on this article.

The potential risks of outsourcing IT services are:

  • Questionable Accessibility: Companies that depend on an outside service run the risk of downtime during critical system failures, leading to possible decline of productivity. Usually, providers offer warranty for operations in 99.9% of the time, so this risk is minimized.
  • Loss of Personal Touch: An in-house system manager becomes familiar with the system he/ she manages. As a result of this, he/she can provide results more efficiently, rapidly and professionally. IT outsourcing solely can’t provide a personal touch that comes close to that of an in-house IT professional. The solution consists in considering IT outsourcing provider being an extension of the own team.
  • Questionable Security Protocols: Companies must examine whether the outsourcing provider utilizes security procedures as powerful as their own. This is especially important when interacting with offshore providers. While these often have outstanding security standards, there is always the risk that one of the outsourcing company employees will break security. You must be careful when you negotiate the Service Level Agreements with the provider. It is also important for you to understand exactly how your applications and data will be protected and the policies that the IT services provider follows to maintain the security of your data.

Before taking the decision of moving to the cloud, every company manager should take into account the risks and advantages for its company and make the most appropriate decision for the organization.

By Rick Blaisdell

Follow Us!

CloudTweaks

Established in 2009, CloudTweaks.com is recognized as one of the leading authorities in cloud computing information. Most of the excellent CloudTweaks articles are provided by our own paid writers, with a small percentage provided by guest authors from around the globe, including CEOs, CIOs, Technology bloggers and Cloud enthusiasts. Our goal is to continue to build a growing community offering the best in-depth articles, interviews, event listings, whitepapers, infographics and much more...
Follow Us!

Sorry, comments are closed for this post.

Join Our Newsletter

Receive updates each week on news, tips, events, comics and much more...

Can I Contribute To CloudTweaks?

Yes, much of our focus in 2015 will be on working with other influencers in a collaborative manner. If you're a technology influencer looking to collaborate with CloudTweaks – a globally recognized leader in cloud computing information – drop us an email with “tech influencer” in the subject line.

What is the 12/12 Program?

This program is designed to better handle the thousands of requests we receive from people looking to submit articles. The 12/12 program is the commitment of 12 articles delivered over a 12-month period.  

Wait! What if I just want to submit one article?

Our popular pay as you go sponsorship program provides the flexibility to submit as you wish and is designed for all budgets.

Contributors

Ten Tips For Successful Business Intelligence Implementation

Ten Tips For Successful Business Intelligence Implementation

Ten Tips for Successful Business Intelligence Implementation The cost of Business Intelligence (BI) software goes far beyond the purchase price. Time spent researching, implementing, and maintaining your BI investment can snowball quickly and mistakes are often expensive. Your time is valuable – save it by learning from other businesses’ experiences. We’ve compiled the top ten

Knots And Cloud Service Providers

Knots And Cloud Service Providers

How Do These Two Compare? In Boy Scouts, I learned how to tie knots. The quickest knot you can tie is the slipknot. It’s very effective for connecting one thing to another via the rope you have. It was used in setting up tents, mooring boats to docks temporarily and lifting your food up into

What Ever Happened To Google Glass?

What Ever Happened To Google Glass?

What Ever Happened to Google Glass? It was supposed to be the next big thing in tech so where did it go? Last year you could not go anywhere without hearing about some insane new use for the product and now it seems to have vanished in a plume of smoke. A Lackluster Rollout Back

Posted on by

Big Data

To Have and Have Not: Big Data Initiatives In Developing Countries

To Have and Have Not: Big Data Initiatives In Developing Countries

Big Data Initiatives In Developing Countries The poor of the developing countries are becoming increasingly connected, to the point where they too are part of the Big Data revolution that’s happening across the globe. It didn’t come with laptops, though, as some supposed it would. Whereas it costs a fortune to connect broadband to a

Big Data In Your Garden: Initiatives For Better Understanding Nature

Big Data In Your Garden: Initiatives For Better Understanding Nature

Big Data in Your Garden Big Data and IoT initiatives are springing up all across the globe, making cities, protesters–and just about everything else–smarter. However, thus far there’s been little attention paid to the interactions between these bizarre technologies and living things other than humans. Biology, that is, human biology is one field where Big

Who Holds the Key to the City: Big Data and City Management

Who Holds the Key to the City: Big Data and City Management

Big Data and City Management Cities like New York, Madrid, and especially Rio de Janeiro are augmented with Big Data-powered initiatives that range from combating crime with predictive analytics (New York & Madrid) to providing real-time data for improved management. Although Big Data is no panacea and is mainly used in conjunction with a greater

Internet of Things

Where’s the Capital of the Internet of Things?

Where’s the Capital of the Internet of Things?

Where’s the Capital? We all know the capitals of fashion are London, New York and Paris, while the capital of film is Hollywood (or Bollywood!) – but what’s the new capital of the internet? Specifically, the internet of things? The answer – according to new research by Ozy – might surprise you. It’s not Tokyo, Seoul,

Smart Cities – How Big Data Is Changing The Power Grid

Smart Cities – How Big Data Is Changing The Power Grid

Smart Cities And Big Data As Anthony Townsend argues in his SMART CITIES, even though the communications industry has changed beyond recognition since its inception, the way we consume power has remained stubbornly anachronistic. The rules of physics are, of course, partially to blame, for making grid networks harder to decentralize, as opposed to communication

Aggregated News

Popular News Sources

Microsoft to enter the STRUGGLE of the Human Wrist

Microsoft to enter the STRUGGLE of the Human Wrist

It’s not just a thumb war, it’s total digit war The battle for the future of the human wrist entered a new phase on Monday after it was claimed that tech goliath Microsoft is planning to release its own wearable computer in the coming weeks.…Read the source article at The Register About Latest Posts Follow

Standards Organization ISO Takes on Cloud Computing Standards

Standards Organization ISO Takes on Cloud Computing Standards

Given the quality differences in different cloud services and issues of compatibility, ISO, the world’s best known standards body has issued two standards related to cloud computing…. Read the source article at Web Host Industry Review About Latest Posts Follow Us!CloudTweaksEstablished in 2009, CloudTweaks.com is recognized as one of the leading authorities in cloud computing

IBM Paying $1.5 Billion to Shed Its Chip Division

IBM Paying $1.5 Billion to Shed Its Chip Division

IBM will pay $1.5 billion to Globalfoundries in order to shed its costly chip division. IBM will make payments to the chipmaker over three years, but it took a $4.7 billion charge for the third quarter when it reported earnings Monday. Read the source article at Mashable About Latest Posts Follow Us!CloudTweaksEstablished in 2009, CloudTweaks.com is