At first, information management (IM) collects the facts the company faces
and design team recommendation. Then IM request for information to numerous
vendors. After compare their response with evaluation checklist which includes
technical, HR, financial, contractual factors, IM conclude the feasibility of
outsourcing and make recommendation for management. Then, with the Management’s
approval, IM start to build best-case model and contract terms while evaluate
the vendors’ proposal using evaluation checklist again. Then, the final
negotiation and selection for contract development will be made and, finally,
terms are finalized and contract is drafted. THE PROBEMS IN OUTSOURCING Many
outsourcing contracts are structured for very long periods in a world of
fast-moving technical and business change. Eight to ten years is the normal
length of a contract in an environment in which computer chip performance is
shifting by 20 to 30 percent per year.
Consequently, a deal that made sense at
the beginning may take less economic sense three years later and require
adjustments to function effectively. Exacerbating the situation is the timing of
benefits. The first-year benefits are clear to customer, who often receives a
one-time capital payment. The customer then feels relieved to shift problems and
issues to another organization.
The situation from the outsourcer’s perspective is just the reverse. The
first year may require a heavy capital payment followed by the extraordinary
costs for switching responsibility to them and executing the appropriate
cost-reduction initiatives. All this is done in anticipation of a back-loaded
profit flow. At precisely the time the outsourcer is finally moving into its
earnings stream, the customer, perhaps feeling the need for new services, is
chafing under monthly charges and anxious to move to new IT architectures. If
the customer has not had experience in partnering activities before, the
relationship can develop profound tensions. The evolution of technologies often
changes the strategic relevance of IT service to a firm. From the customer’s
viewpoint, assigning a commodity service to an outsider is very attractive if
the price is right. Delegating a firm’s service differentiator is another
matter. The customer that made the original decision on efficiency will judge it
differently if using effectiveness criteria later. CONCLUSION IT outsourcing has
so many positive effects for a company even though it still contains various
problem needed to be solved. In the Internet age, any company may want to focus
its internal staff on moving it to the environment that will support them
tomorrow and outsourcing could be one of the best solutions. Also, outsourcing
is really more of an integration of two separate businesses to be successful.
Both want to take the best parts of each culture and put them together. In
addition, critical success factors including existence of a multi-years,
corporate commitment to the IM strategy and outsourcing, and quality culture and
attitude should be considered in outsourcing.
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