Information System Outsourcing - Essay Example

Running Head: Information System Outsourcing Information System Outsourcing [Institute’s Name] Information System Outsourcing Information system outsourcing has become popular over the last decade owing to the high level of mobility in the services sector globally. It is easier so outsource the development of information technology and systems and workers do not require complex infrastructure to begin their work. Moreover, the advantages of cheap labor are available through outsourcing work to developing countries.

It is also interesting to note that many developing countries have responded positively to outsourcing technologies both at the macro level where the governments have introduced favorable policies and the employee base has successfully enhanced its technical skills and improved upon the quality of work performed. Information technology outsourcing boom began less than a decade ago, when many entrepreneurs in countries like Philippines and India introduced these concepts in their respective countries and made their fortunes in the industry.

They were able to capitalize cost advantages and maintain high quality through training human resources and retaining their pool of talent through paying them relatively higher wages compared to competitors in the same country. Global information system outsourcing in India has been very successful and many multinational have since set up their works in the country. Corporations such as Dell, IBM, Accenture and JP Morgan Chase have shown great interest in capitalizing on this outsourcing opportunity (Tho, 2005).

They have grown their operations in India substantially over the last few years and the overall outsourcing business has provided skilled opportunities to over half a million people in the country. These companies have attempted to double their workforce in India in just one to two years. However, the availability of skilled labor in developing countries such as India is assumed. Many universities established skilled programs in information technology to create a strong pool of workforce to support the growing industry.

It appears that the growth of this sector has overpowered the growth in the creation of suitable workforce and at this time, many of these companies are facing acute shortage of trained professionals. This has certainly led to a battle between major players to attract the best workforce and is resulting in a hike in wages. As the outsourcing market is highly competitive internationally and has high level of mobility, it poses a certain degree of threat that major operations might be to other countries that are better able to provide a stable supply of skilled workforce.

China has replicated the Indian model, is taking a more sustainable approach towards creating a stable flow of skilled workers, and seems determined to grab a substantial market share in the outsourcing business. IBM is one successful business that has been able to retain a large pool of highly skilled labor in India. Its labor forced has increased substantially from thirty-five thousand employees to well around sixty thousand head count (Tho, 2005). Its success is deeply rooted based on its ability to pay premium wages to its employees based on its international standing and its ability to charge its clients a premium based on its brand image.

British Petroleum similarly outsourced its entire information technology system development program without enough geographical diversification and found after a year that none of the information technology firms in India was able to provide any satisfactory program for implementation (Schwalbe, 2009). In conclusion, it is clear that outsourcing has its benefits for both parties but also adds significantly to the risks. A better strategy for outsourcing is the use of multi-sourcing to avoid risks related to non-performance and delays.

References Schwalbe, Kathy. (2009). Information technology project management. Cengage learning. Tho, Ian. (2005). Managing risks of IT sourcing. Oxford Publishers.