INTRODUCTION
Outsourcing is one of the new ways to expand the business or the skills to achieve success or target higher than usual. Outsourcing can be defined as any kind of task, operation, job or a process that is done by employing employees in an organization, but it is contracted out to a third party for a predetermined period of time. In addition, the functions performed by these third parties can do the work in the area or outside the area. For example, a company requires expertise in a field and a lack of expertise in the country, they can contract a specialist from outside the strict conditions laid down and agreed.
Most times outsourcing are mostly done by large companies where their status is stronger and the economy and their finances well. Small companies often rarely do the outsourcing process as thought it was not very safe and may cost relatively high. Assuming they are too short and they do not quite understand the advantages of outsourcing itself. With this advantage they can develop their skills with the expertise they can only be imposed from the outside with a very reasonable cost compared to those taking experts from abroad to their companies which necessarily increase the cost of their operations.
As performed by the Royal Bank of Scotland which they outsourcing employees for information technology projects and their information systems from abroad among them junior technician who comes from India. But in this case caused some problems in the system that they run that there was some problem in the system data lost due to software updates they freeze. Consequently, millions of transaction have affected by that problem.
1.0 Question 1
Competitive advantage can be defined with multiple me...
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...company may end up bearing huge cost of damage control such as happen at RBS who the Register speculated that it is done by inexperience technician who mistakenly delete an important data which result the computer malfunction.
And from this assignment, it shows me on how to devise a careful planning so that it might overcome the problem that might persist in the future. It teaches me to anticipate the problem and devising a plan if the problem should occur. And critical thinking in which test me to think fast with the limited resources.
As a conclusion, this assignment teach me to think, anticipate, act, and analyze obstacle that may happen and in business management specifically in IT/IS field, all element to ensure the system is running smoothly need to be pay attention. And step has been taken to ensure problem that might occur has been down to minimum.
Outsourcing simply means acquiring services from an external organization instead of using internal resources (Butler, 2000). By using outsourced resources, organizations can gain a competitive advantage by utilizing contingent staff to accomplish strategic goals without incurring the fixed overhead. By focusing on the leading edge and highly specialized skill sets, outsourcing providers can often offer higher quality services, or at a lower price than the client organization. Typical reasons for outsourcing go beyond simple contingent staffing. Outsourcing providers are able to maintain economies of scale with regard to specialization (...
Offshoring or offshore outsourcing is the practice of a company or a firm hiring or contracting in utilizing the services, skills or labor of the personnel from an outsourcing service provider that specializes in the need that they are looking for such as develop systems, customer service or even write code either from a developing or under developed countries, in their efforts to lower their operational costs and improve their service efficiencies and quality of their products. The former company is called ‘the Outsourcer or the Client’ who pays the money for the services obtained and the later company is called ‘the Outsourcee’ for providing the services to the outsourcer.
Outsourcing is a complicated and a multifaceted subject that involves a “business[’s] purchase of parts or labor from another company rather than maintaining a sufficient enough number of its own employees to do the same work in the country where the company is already based” ("Outsourcing"). The first practice of outsourcing was in medieval times when “nation-states called in soldiers-for-hire to help their own military forces during ongoing conflicts” ("Outsourcing"). Many think of outsourcing as a one way trade of production facilities moving outside of a companies locale but in actuality it is a two way trade that also involves companies from other areas moving their factories to local areas where conditions are beneficial for the specific business. Outsourcing has evolved but the main idea has remained the same. The recent increase in outsourcing “was initiated by Wall Street pressures on corporations . . . . for increased profits . . . in the production of goods and services marketed in the U.S."(Roberts).
This case discusses a crisis at the Royal Bank of Canada (RBC) that occurred on May 31, 2004. The crises involved a programming change to a vital piece of banking software. An incorrect change to the code led to the failure of the bank’s programs which in turn led to customers that could not check account balances, customers (and non-customers) that did not receive paychecks, automatic payments and bank transfers that were delayed, and duplicate transactions.
Usually the firms to which the activities are outsourced are specialized in their area of work and so the parent firm gets the advantage of getting the work done through competent employees. Therefore, outsourcing gives competitive advantage to the companies which can be easily sustained by them without much effort.
The significant level of outsourcing programs used across all business sectors is well documented in the literature (Bender 1999; Quinn 2000; Dun and Bradstreet 2000; Klaas, McClendon and Gainey 2001). Past research has progressed along several paths. First, some researchers have focused on motivations and reasons for outsourcing activities (Conner and Prahalad 1996; Greer et al. 1999; Sinderman 1995; Mullin 1996; Grant 1996; Frayer Scannell and Thomas 2000). According to this perspective, the global imperative for outsourcing accelerates as firms evolve from sellers of products and services abroad to setting up operations in foreign countries and staffing those operations with host countries or third party nationals (Greer et al. 1999). Most corporations believe that in order to compete globally, they have to look at efficiency and cost containment rather than relying strictly on revenue increases (Conner and Prahalad 1996). As companies seek to enhance their competitive positions in an increasingly global marketplace, they are discovering that they can cut costs and maintain quality by relying more on outside service providers for activities viewed as supplementary to their core businesses (Mullin 1996; Grant 1996).
Case study is about computer failures that occurred at Royal Bank of Scotland due to inexperienced operative in India. this has resulted in millions of customers unable to access their account simply because of a mistake made by a technician. This issue occurs when the software upgraded is implemented. All programming staff at RBS admits that matters is occurred because they have been based in Hyderabad, India.
The term outsourcing refers to the act of contracting out business activities and procedures to a third party. The act of outsourcing sometimes involves the transfer of assets from one organization to the other. The term is also used to describe the act of handling the control of public services to the private corporations. Outsourcing mainly involves both the local and foreign contracting. At times, the term is used to describe relocation of business organizations to another country which is a also known as off shoring. This term is very popular in the U.S especially in the 21st century (Davies, pg. 21). The main motivation for the activity of outsourcing is the financial saving due to the reduced international labor market rates. The opposite of outsourcing is in-sourcing which is the act of bringing the business process that are handled by the third party back to in-house or the local areas instated of contracting it to another country.
This case study is related to the computer glitch that happened in a bank. The Royal Bank of Scotland has caused millions of the customers unable to access their account. This incident happened is caused by a junior technician in India do not have the skills that are efficient in carrying out a given job.
Nowadays, many large companies are using outsourcing through IS/IT sector in order to gain benefits to their company especially reducing expenses. it also to ensure that the company can focus on their core business and give other operation to outsourcing company that is expertise on the field.
I was given a task by Madam Manaf to complete the Business Information management assignment about RBS computer failure 'Caused by inexperienced operative in India'. This assignment tells about the computer glitch at the Royal Bank of Scotland which left millions of customers unable to access their accounts could have been caused by just one junior technician in India.
Outsourcing is a technique for companies to reassign specific responsibilities to external entities. There are several motivations for outsourcing including organizational, improvement, cost, and revenue advantages (Ghodeswar & Vaidyanathan, 2008).
Almost every process of day to day life is controlled by computers and the banking sector is one of them. Every bank has adopted computer integrated systems to make their process easier and it does. Minor computer malfunctions causes major glitch to banks as the complete system is depended on computer and software. We can take the example of latest computer crisis faced by Royal Bank of Scotland (RBS). This system failure caused major damages and millions of customers faced difficulties to access their account, all this happened because of inexperienced operator in India as per the reports.
There are many reasons for a company to want to outsource the services or products that they need or want. Six of the biggest reasons for companies to outsource are motivation, specialization, survival of the economically fittest, economies of scale, heavier market coverage, and independence from any single manufacturer.
In this case study it was stated that there were a problem happen in the outsourcing for the Royal Bank of Scotland. What happen was there were an error that happen during the routine software upgrade that cause million of that bank customer cant access to their account. The error happen when one junior technician in India was accidently wiped all the information during the routine software upgrade. The member of staff that was working under the program for the Royal Bank of Scotland, NatWest and Ulster Bank and it was based in Hyderabad, India.