Future of IT Outsourcing - Essay Example

? Business Telecommunication Daniel Bushnell of Outsourcing is becoming an increasing need in today’s telecommunications industry. Nowadays, businesses are competing at a number of levels and need to find ways to gain a competitive advantage over their competitors. However, there are many different types of outsourcing that a firm can choose to implement so it is imperative that business managers make a choice that best suits their business. When CEOs are deciding upon what type of outsourcing strategy to pursue, their telecommunications company needs to think of all the advantages and disadvantages. The three main outsourcing options are domestic outsourcing, offshore outsourcing, and mixed outsourcing. I feel that the best choice of these three is domestic outsourcing because there are few disadvantages for telecommunication firms. Outsourcing—the New Economic Answer to a Tattered World Economy How can outsourcing be defined? Well, outsourcing is the process of hiring workers outside your business to carry out the various tasks needed for your business (Baxter, 2011). The telecommunications industry is faced with the issue of outsourcing all the time. These types of businesses need to calculate whether it is economically viable to hire home country staff or outsource the work overseas. In order to determine this, we will review some of the advantages and disadvantages to contracting out work that is normally done from within and by company employees. Some of these reasons include reducing overall costs, scalability, ability to focus on critical business needs, and legal tax benefits. Outsourcing enables a company to access global talent at a fraction of what it would cost to hire an employee (“When is Outsourcing not Outsourcing?” 2004). Because the economy in a shambles, bailouts are running rampant, and the price of gold is going through the roof, many businesses are electing to hold onto their money and not expand the company. Hiring contract workers can be very advantageous because you can help remove legal liability, get the job done faster and cheaper, and fire and or change-out new people/talent at will. There are many different types of outsourcing, but none of them are a fit for all. This paper will discuss different options and will make a business recommendation for CEOs in the telecommunications industry. In general, telecommunication corporations need to reduce overall costs and increase profit margins for shareholders and in an uncertain and confused economy at that. The introduction of Eastman Kodak outsourcing may have cleared-up some of the muddy waters and given business executives some of the incentives they need to take outsourcing to a whole new level (Earl, 1996). As an example, I will use information technology for my outsourcing project because IT outsourcing is a typical make-or-buy decision. Here are some of the positives and negatives of outsourcing shown in the table below: Advantages Disadvantages Flexibility Security Scalability Job displacement Tax incentives Poor customer service Legal liability Culture and language barriers Overall cost reduction Poor quality control Selecting an outsourcing provider is a definite challenge for telecommunication problems. There are many options and none of them will accomplish all your business requirements (“Offshore Outsourcing Models, 2007). This means that tradeoffs are necessary. Here are three options I have chosen for my research paper: A. 1. Option 1: Domestic outsourcing: This is where a company contracts out work to another company that is located within the same country. A.2. Option 2: Offshore outsourcing: Offshore outsourcing occurs when businesses outsource work or even entire departments to foreign countries. A.3. Option 3: Mixed outsourcing (offshore companies with your country’s business presence): This is a mixture of the previous two options where work is contracted overseas but under the supervision of the local company’s business operations (Quinn and Hilmer, 1994). When making a decision on whether or not to outsource work, telecommunications companies need to make sure the workers that they are hiring are qualified for the tasks at hand. My personal opinion and recommendation is that if a firm must outsource, then Option 1 (domestic outsourcing) is the best choice because it contains the most benefits. It has none of the many foreign legal challenges, no customs/language barriers, no customs' delays, fewer security issues, zero negative political issues, positive company image, quicker reaction times to product changes, and no foreign requirements when visiting properties. There will always be risk associated with outsourcing (“Assessing the Risk of IT Outsourcing,” 1998). I think that it is a very complicated issue and can be economically positive or negative depending on how CEOs approach it. I think we need to do this methodically. As such, it needs to be regulated by governments, not businesses. If it is not, then we are feeding a snake that will eventually swallow us whole, but if done properly, we can embellish the world. I think a good start would be to make sure that telecommunications companies outsource to countries that don’t use child labor. Also, CEOs should focus on countries and businesses that develop their nation and not just take from it. One way to do this could be to use a 1:3 ratio and timelines for third world and developed nations. I believe that governments need to work together by coordinating outsourcing. Basically, all we can do is use our business training, cultural experiences, and even gut feeling to make the best business decisions we can. It's not all about money; it's about nations, people, economies, and their environments. Be the best in the world, be fair, and respect other cultures. I feel that the biggest challenge is the knowing and the understanding of cultural, legal, and political dealings of locals. I don't think that telecommunications companies will ever figure this one out. I also think that outsourcing hurts both the local and foreign countries and will only benefit top business executives and CEOs if it is left up to the corporations. These third world countries have the resources and talent to make it on their own. I hope they learn this fact soon and save their culture. There is nothing more beautiful in the world than getting to know and learn from other countries and cultures. References “Assessing the Risk of IT Outsourcing.” (1998). CS Digital Library. Abstract Retrieved June 15, 2011, from http://doi.ieeecomputersociety.org/10.1109/HICSS.1998.654830 Baxter, C. (2011, May 19). What is Outsourcing? Retrieved June, 8, 2011, from http://www.caroline-baxter.com/what-is-outsourcing? Earl, M. J. (1996). The Risks of Outsourcing IT. Retrieved on June 11, 2011, from http://web.ccsu.edu/business/faculty/petkovao/mis498/risks%20of%20outs.pdf “Offshore Outsourcing Models.” (2007). Offshore IT Outsourcing. Retrieved June 17, 2011, from http://offshoreitoutsourcing.com/Pages/outsourcing_models.asp Quinn, J. B & Hilmer, F.G. (1994). Strategic Outsourcing. Sloan Management Review. Retrieved June 20, 2011, from http://www.decon.unipd.it/info/sid/materiale9/bel_eat_letture_ottava_settimana/quinn 1.pdf “When is Outsourcing not Outsourcing?” (2004). Windows IT Pro. 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