While every organizations and company are enjoyed the benefits of IT outsourcing, the awareness of drawbacks and threats about outsourcing risk is also had been increased over the time. There has been a focus on the vulnerability of these risks and threats. In fact, the issues of security must be a part of outsourcing is not new. So, anyone looking at outsourcing needs to think carefully. It is very important and essential to understand the risks and to take all reasonable steps to keep them in a minimum. The risks and threats that associated with outsourcing are as follows.
Risk of insiders
Any business is always exposed to risk. And same goes to outsourcing. IT outsourcing can be classified as an example of risky business endeavor. While business attacks and risks from outsiders are more publicized, attacks and risks committed by insiders are very common and often damaging. Regardless the advantages that can be gained through IT outsourcing, it can also lead to unwanted outcomes such as escalating costs, diminishing service levels and loss of expertise. The firm and company will face losses amounting to the cost of the outsourced project if these risks are not managed properly. Not only that, the damage done can also cost the company not only in terms of money but the reputation of the company itself might be tarnished. This is due to the fact that most insiders are after the clients’ proprietary and confidential information assets or intellectual property of the company, which might be much more costly than losses in terms of money.
How to overcome risk of insiders
Since the risk and threats of insiders has becoming popular over the decade, experts and researchers has come out with several method and program to overcome t...
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...ured and unattainable.
Opportunistic repricing
When a client enters into a long term contract with a vendor, the vendor changes financial terms at some point or overcharges for unanticipated enhancements and contract extensions. Opportunistic renegotiation becomes possible when either party comes to enjoy an unanticipated increase in power. The party with power can exploit the strategic vulnerability of the other for example, the client can decide to pay less, or the vendor can demand more.
How to overcome opportunistic repricing
It is important for the client to understand well of the resources and the contracts given to the vendor. Therefore, the vendor will definitely complete only the given task and not to manipulate the contract. The client also must have a high degree of strategic vulnerability that allows the contract authority is in the power of client.
Reintiate negotiations by introducing new negotatiors in the equation, and discussing some of the isuses on table to achive pareto efficent frontier (Lewicki, Saunders, Barry, 2011, p. 62). Negotiators should find a bride solution in accordance with stratergies of integrative negotation. In current circumstances TexasAgs is taking heavy losess to get the contract signed, this is not good for a long term business relation.
Recently outsourcing has been in the news, especially during political election years. It seems to be a phenomenon that is causing much concern among the population. But exactly how is outsourcing effecting both workers and businesses? And is it as big of a problem as politicians describe?
The proponents of contracting out assume that outsourcing in the IT sector is useful in strategic, technological, and economic reasons. (Gonzalez, Gasco & Llopis, 2009) They believe that outsourcing enables an organization to get the same or better services with lower cost. First, strategic advantages enable organizations to refocus on strategic and core functions, and provide flexibility for organizations because organizations need not to concern about routine tasks (Gonzalez, Gasco & Llopis, 2009). OPPGA (1998) also support these strategic advantages. It asserts that outsourcing can provide organizations with great flexibility in personnel and facilities in short-term projects. Outsourcing providers can provide better services for clients since they usually use new and developed technologies. Second, proponents think that outsourcing gives organizations opportunities to access to technology and reduce technological obsolescence without large investments (Gonzalez, Gasco & Llopis, 2009). Lastly, Pros assume that contracting out can save s...
In many cases outsourcing has proven to be beneficial for businesses. It can help a business’s management by allowing executives to focus on the core structure of the firm rather than every specific element. Production, manufacturing, or additional servic...
Every enterprise could be a victim no matter how big or small they are. Every little insignificant penny that a company loses because of their employees usually comes from the owner’s pocket. Having a guard up for the potential crimes and those employees who are most likely to commit an offense is the main step to fulfill the prevention technique. Careful hiring of employees and internal business rules help raising workplace
The Pacific Oil Company went into negotiations with Reliant Manufacturing, and its goal was to sign a more long-term agreement prior to the contract ending in three years. Pacific anticipated that the new contract would be signed with no major obstacles or changes, and that the dominant point of negotiation would be price and potentially quantity. Jean Fontaine, who is the marketing vice president for Pacific Oil, went into a negotiation process with Reliant. Fontaine started the process several years before Reliant Manufacturing’s contract was up, positively hopeful to beat her competition to the lower price offers and leave with a contract extension of five years. Unfortunately, Pacific did not properly research and do their homework on her client’s needs or adequately analyze what the long-term outcome might be. Pacific Oil Company was not prepared to address the concerns and requests that Reliant brought up during the negotiation. Though both parties wanted to move quickly toward signing a contract, Pacific Oil Company lengthened this process because it did not have a well-planned negotiation strategy that included a contingency plan or best alternatives. It seemed like going into the negotiation phase it was a win situation for Pacific touting their long-term relationship in the past w...
Companies outsource for many different reasons. Perhaps the best know and least understood of those is to save money. Most people probably think that it is just greedy rich CEO?s trying to get richer. While in some cases this may be true, more frequently it can be in response to an overall downturn in the economy. Companies trying to maintain in the hard times are forced with trying to find ways to save money. According to Julekha Dash in her article ?Cost cutting may spur IT deals? on computerworld.com ?The cooling economy may prompt firms to outsource more IT or cost cutting reasons.? In the same article they stated that in a pole given to 150 American and European companies 39% of the companies listed saving money as there primary reason for outsourcing. Saving money was the number one answer given.
Outsourcing has only very recently become an issue in the United States, and as a result it has become a very popular political issue during campaigns for presidency. Outsourcing is the idea that a company will subcontract to a third party, usually outside of the US, for various parts of its business structure. An example of this and perhaps the largest source of outsourcing is call centers for tech support, where a company will subcontract to a third party and that party will build up the call center and hire the workers for it. Many people have been affected by outsourcing since it started being used widely in the 1980s, and most would argue that outsourcing is not a good business model, that while it not only negatively affects them, it affects the whole economy. While there are some unmistakable positives to outsourcing, I would argue that as a whole, the negatives far outweigh the positives and outsourcing is bad for the United States.
The competitive advantage that can be gained by the companies through IS/IT outsourcing is Improved business processes. IT outsourcing an identification method and rigor of IT resources that can help the business run smoothly. It can control the development of the project budget and expenditures. It also can promote information technology investment proposals from outside and provide skilled individuals in managing IT resources available in the company. Through these companies are able to provide appropriate information and report to the company. This can give competitive advantage to the company. For example, expenditures, progress, and issues the company can be viewed and controlled.
Outsourcing has been around for many years. In this paper, I will discuss some of the history of outsourcing, the good things about outsourcing, and the bad things about outsourcing. Outsourcing is important because many companies rely on it in order to get many different products and services to their facility on time and in good shape. Outsourcing is a huge part of the business industry today. Any business can be affected by outsourcing.
The first problem with the renegotiation of this contract was the projected demand for VCM creating a “buyers market”, according to the textbook, “the demand was high, but the supply was to increase exponentially” (Lewicki, Saunders, and Barry 2010) Reliant was already locked into a five year contract with Pacific Oil, but there would be stiff competition at the expiration of the that contract. Knowledge of this market situation put Reliant in a position of leverage and trapped Pacific Oil into a desperate sign at all costs scenario. Gaudin and Fontaine assumed that even with a fluctuation with price; Reliant would sign a new because of their established relationship Pacific Oil. Gaudin and Fontaine’s assumption opened themselves up to more concessions by not attaching conditions to the price adjustment. They could have countered with a reduction of the formula price on the condition of contract length.
Once a whistleblower has disclosed to an external party, the public and media scrutiny, as well as possible resulting charges may result in long-term harm to the reputation of an organization (Figg, 2000). As a consequence, an immense amount of time may be spent fighting whistleblower disclosures, resulting in a possible loss of morale among employees remaining within the organization, and the formation of any chaos and mutual suspicion among employees can affect the performance of the organization. There may also be issues of lost revenue and a decrease in the market performance of the organization. Weinstein (1979 cited Keenan 1995, p.4) notes that more often than not, managers have taken the stance that whistleblowers pose a risk to the organization’s unification, authority structure, and public
The assignment research objectives were (a) to gain insight into securing strategic partnerships in the information technology (IT) arena; (b) to understand the choices made to reduce information and security risks by exploring the different outsourcing techniques, and; (c) to understand how business process associated with outsourcing will stimulate awareness on how the process is interlinked with human behaviors. The topics covered include an evaluation of the specifications of information security consultants to become strategic partners assisting in the reduction of information or security risks, an examination of four factors that were omitted in the specifications that add value to the selection process, and an explanation of the value of the four factors.
A disciplined approach to management eying leading employees, improving the management team and building the business strategy. Instead of treating each problem as a one off. They design systems and structures that make it easier to handle in the future. (Techrepublic, 2015) 2.2. Risk of exposing confidential data: When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-party Synchronizing the deliverables: Some of the common problem areas include stretched delivery time frames, sub-standard quality output and inappropriate categorization of responsibilities. At times it is easier to regulate these factors inside an organization rather than with an outsourced partner Hidden costs: Although outsourcing most of the times is cost-effective at times the hidden costs involved in signing a contract while signing a contract across international boundaries may pose a serious threat Lack of customer focus: An outsourced vendor may be catering to the expertise-needs of multiple company at a time. In such situations vendors may lack complete focus on your organization 's tasks. 2.3. 1.Know the
Jeremy, G. T. (1989). How to negotiate better deals. London, UK: Gold Arrow Publication Ltd.