1.0 Critically evaluate the competitive advantage that can be gained by companies through IS/IT outsourcing. Provide suitable example to support your answer.
According to Amadeo, 2013, as an employee, a business or a country itself, we need to have a better understanding about competitive advantage and communicate it to the customer. Competitive advantage can differentiate the company and others competitor from the eye of customer. It also will help the company to operate in more efficiency. To be competing in the industry and gain the profit and success over the long term, company need to finding and nurturing a good competitive advantage.
For the IS/IT outsourcing, the outsourcing is hired by the company to others company that provides services for IS/IT. The providers need to do specific job in their expertise. By hiring outsources the company can solve their problems. Nowadays, outsourcings become a trend and it is the common thing for organization to hire IT/IS outsource in managing the business and this is the way to run the business efficiently. In other case, almost the whole information management of the company is outsourced by other company. From planning until maintenance all is managed by outsource. (Margaret, 2007).
So here, what are the relationship between competitive advantage and outsourcing? For my opinion, there a lot competitive advantage that can be gain by company by hire outsources. For example:
1.0.1 Start project quickly
By hiring outsources, company can run their new work or project quickly. To start IT/IS project such implementing new system for companies may take weeks or months even years to handle it internally. Company usually wants to make it fast yet efficiency to use and compete with others ...
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2.2.2 Lack of Expertise
What company expects when they give the project to vendors is they have expertise in their company and they will get a quality product. But what happen here is most or the organization does not have any sufficient understanding the area of knowledge that the vendors have and the value of the expertise they have. This is important to client to dig the information about the vendor. They need to beware of the vendors. Most of vendors have a problem when client ask them for proven for their team of experts. They supposed to state in the resume as a part of their proposal about their team of expert and certificate to prove it. Client has their own right to know the more specific in computer application, programming language or the system platform. The company has the right to insist the specific staff to be assign in the project.
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 (...
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.
While some large firms are able to find a service provider to cover some of their outsourcing needs. Few firms have found a service provider that can take over entire functions. Some have found that finding a service provider capable of providing services required only at a non-cost-effective-rate. The lack of a competitive marketplace may adversely affect the cost savings. (a350397)
Outsourcing is to obtain (as some goods or services needed by a business or organization) under contract with an outside supplier. (Merriam Webster) Some of the time an organization can not handle all aspects of a business process internally. The advantages of outsourcing is allowing companies to have lower operational and labor costs, faster production, and allowing companies to focus on core activities.
The competitive advantage that can be gained by companies through Information System or Information Technology outsourcing is efficiency and effectiveness in product or services. According to Vishal Patel, Executive Director of Copy Cat Ltd, efficiency and effectiveness are keys to every company to maintaining its competitive edge and that is where we come in; we provide IT solutions to our clients that will enable deliver a good quality product to their customers to do so within the shortest time possible. The company must have it because to main...
Competitive advantage is the advantage for the competitors and gained by the offerings from the consumers that have the greater value either by the low prices of the products and by providing the benefits and services to the consumers that denotes the high price. It is a set of the innovative and different features of the company and the products and services sale to the consumers so that company can achieve the targets what they have decided and it is the betterment for the enterprise in the competitive market (Porter, 2011). There are three determinants which can be used in the competitive advantage that what the company produce for their consumers, their target market that what they have to achieved and the competition from the other entity
The next competitive advantage is quality of service. Outsourced environment is quite different than that of the environment in an enterprise. Advertisers are different economic entity with profits at risk. External service provider will make every effort to deliver good quality; good service and everything will apply and will be tested. For example, the usage of the ITIL methodology. Service providers will also provide high output, and perform better output, needs, and change control. Thr...
Competitive advantage is mean a firm’s ability to create value in a way that is rivals cannot. While outsourcing is a business strategy that moves some of an organization’s functions, activities, processes, and also decision responsibility from an organization to outside providers. This outsourcing is done by doing negotiating contract agreements with a vendor who takes the responsibility for the quality, customer services, production process, and people management of the function. So, to allow organizations to focus on their core business and create a competitive advantage, the organization must use outsourcing. Outsourcing is use to reduce operational costs. However, outsourcing have a lacking or disadvantages such as quality risk, quality service, language barriers, labor issues, and legal compliance and security.
Comparative advantage is when a company or country can produce a product or services at the lowest opportunity cost compare to their competitor. Meanwhile, outsourcing is when one company outsourced their portion of work or job to another company that are more expert and experienced to handle the task. Nowadays, almost every glorious company outsources their portion of work or job in order to gain competitive advantage.
Outsourcing has been utilized by companies in sundry industries for many decades as a key business strategy (Ghodeswar and Vaidyanathan, 2008). Harmancioglu (2009) argue that several successful companies depend on outsourcing to continue being responsive in coping with market changes as well as to expand their operations globally. He also stated that outsourcing was primarily perceived and employed to reduce costs, however recently it has become a prevalent and essential tool to gain competitive advantage. There are various reasons that lead companies to outsource some of their functions, these include: cost cutting, entrance to new markets, and to concentrate on main activities (Ghodeswar and Vaidyanathan, 2008). Wright (2004) mentions a number of functions that a company can outsource, these include: human resources, customer care service, and information technology functions.
We can define competitive advantage as simply what a given company excels best at. This could be the distinguishing factor as to why consumers purchase from your company and not the competition. This could also be understood from the perspective of quality that a business can create for the consumer.
Competitive advantage is when a company or country can produce a product or services at the lowest opportunity cost compare to their competitor. Meanwhile, outsourcing is when one company outsourced their portion of work or job to another company that are more expert and experienced to handle the task and also almost every large company outsources their portion of work or job in order to gain competitive advantage.
There are many reasons that companies outsource various jobs however, the most important advantage is to save money. Many of the companies that provide outsourcing and offshoring services are able to do the work for considerably less money either because they do not have to provide benefits to their workers have fewer overhead expenses or have cheap labor as prevalent in China. Thus it is often more cost effective to outsource to China and other countries that are more affordable. Outsourcing also allows companies to concentrate on other business issues such as new product developm...
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. No matter how big or small a business is a business is able to outsource services that they could not do profitable on their own.
...urcing services, the company operation will be became a mess. This is because one organization can’t run a lot of task or project at one time. Therefore an organization need outsourcing in the way to help their organization run smoothly.