Outsourcing itself is generally thought of as a secondary business practice. Ideally it is intended to be a temporary solution to an immediate business need. As technology becomes more sophisticated with the passing of time, outsourcing has grown in activity in the past recent years in tandem with the availability of more advanced, cheaper technologies. These include the proliferation of mobile devices, the increased usage of internet communication and the emergence of CLOUD services being offered by increasing number of vendors. Information technology components now permeate almost all functions of the business world and thus the risks which are present with the use of this technology also has become a growing concern for CIOs and IT managers alike.
The approach we took to creating the Risk Assessment Framework for Outsourcing of IT services was to look at the unique characteristics that are involved in a IT outsourcing project.
There are several issues that CIOs and managers should be aware of when it comes to outsourcing of IT activities. There are four main differences in risk which separate IT services from other kinds of outsourced activities.
Firstly is the difference in Business Operations and Transactions. A flow process should be envisioned for a given transaction and/or IT activity and if there are any steps in the process where the company is reliant on external providers for any kind of input or execution of an activity, then these risks should be examined more carefully. Could there be a possibility of the external supplier failing to meet their obligations and in turn not deliver on their services?
Focus should be on the risks that are most likely to occur, since it is impossible to be prepared and aware of A...
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...that might be affected directly, or indirectly through the use of an outsourced IT activity.
Business continuity risks - These risks pertain to the possibility of stoppage of an outsourcing vendors services provided to your client company. What factors may be a potential hazard to your company's operations in such a case and to look for methods to minimize the negative impact of this kind of scenario.
Financial risks - These risks include potential affect on your company's expenditures and monetary repercussions that an outsourced activity might have. A focus is also on the implications for contract terms with the vendor.
Governance and Regulatory Compliance risks - These set of criteria is meant to raise awareness of regulations and policies that could be imposed on an institution such as BMO by external agencies and/or federal governmental oversight organizations.
... bring the anticipated benefits, and in some instances can be a risky proposition (Chin, 2003). Villcocks and Lacity (1998) stated that among the possible disadvantages are the potential loss of control over critical functions such as timeliness and quality of service, difficulty in monitoring vendor performance, difficulty in explaining the business needs to vendors, the potential for loss of company secrets as well as intellectual property, and the high cost of outsourcing contracts. Schools also risk developing a dependency on outside agencies, lowering employee morale, loss of development skills for employees, and having to face the prospect of managing relationships that go wrong (Kakabadse & Kakabadse, 2000; Hayes, 2001). By outsourcing, not only do schools lose some of the personal touch in servicing their employees but their clients as well (Rombel, 2002).
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?
With the United States’ economy in a depression and our unemployment rate skyrocketing to record highs, job-outsourcing has moved to the top of the list of controversial issues. Froma Harrop’s essay New Threat to Skilled U.S. Workers and Thomas Friedman’s essay 30 Little Turtles discuss two different viewpoints of job-outsourcing, and their effects on society. Does our government really want to cut back on job-outsourcing, and what can society do to help the issue? Friedman’s standpoint on job-outsourcing shows how it is emotionally beneficial to other countries and Harrop’s factual standpoint shows job-outsourcing regulation, however, I feel that our citizens are unaware of the opportunities and our government is eager to send the jobs overseas.
Outsourcing may be a wise business decision for certain companies but that doesn’t necessarily mean that it doesn’t carry any risks with it. Outsourcing jobs to countries outside of Canada brings risks to the businesses and companies using it and problems for other people in the Canadian labour force actively looking for jobs. A possible risk for companies that are outsourcing is a lack of focus on their company. If your company has outsourced the services of a vendor than there is a large chance that other companies have also hired the same vendor to work for them. This means that the vendor is simultaneously working for your company and other companies which can take their focus off of you and possibly make them lag in work or do a worse job. Another disadvantage is a growing dependence on...
Internal Risk Assessment Risks Description Management Conflicting interest Conflicting interest of the management Sub-optimization Lack of goal congruence Force majeure (ex. fire, robbery, etc.) Acts done by the employees of the company Loss of competitive advantage Tampered reputation Financial mismanagement Internal control breach Operations Employee mutiny Different interests between the management and the employees that can lead to boycott of their work G. Issues and Challenges Arising from Internal Analyses The analysis of the company's internal environment is based on the strength, weaknesses, and and the risks tied to it.
157). In most cases, the organization will have positive consequences since they are the ones considering the outsourcing. Mintz says that benefits an organization gets from outsourcing include increased productivity and allows current management to focus on clients (2004, pg. 6-7). The current employees and families will have experience job loss. The current community will potentially lose tax income, increase unemployment, and families will leave the community. The potentially new employees and families will have new jobs that will provide wages and benefits. The new community will get increased tax revenue and population
Lim, W., & Tan, S. (2010). Outsourcing suppliers as downstream competitors: Biting the hand that feeds. European Journal of Operational Research, 203(2), 360-369. doi:10.1016/j.ejor.2009.08.006.
Kibbe, C. (2004). Outsourcing: the good, the bad and the inevitable. New Hampshire business review, 26(14), 1A.
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.
...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.
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
Operational risks are risks that may occur in the day to day activities, which may involve the process, systems, or people. Strategic risks are those risks involved with strategy. Positioning ones’ company with the right alliances and competing with fare prices will help affect future operational decisions. Compliance risks involve the many legislations and regulations a company must follow. The results could lead to high penalties and a company’s reputation could take a hit. Lastly, financial risks are always being monitored because oil, fuel, and currency rates are constantly fluctuating. By monitoring the fluctuating rates determines fare cost and balancing of the budget. “Like in any other industry, the risk exposure quantifies the amount of loss that might occur from any particular activity” (Genovese,
...e steps that are required to be addressed while coming to deal with vendors. The Proposed idea, looks satisfactory in meeting the outcomes. One thing that should be ensured is that they should incorporate the clauses pertaining to risk in the plan.
The practice of outsourcing jobs is not a new concept. People have been outsourcing jobs for decades. Some people even offshore outsource jobs. There are many opinions to offshore outsourcing based on how it influences the economy. Some people are in favor of outsourcing jobs and some people are against outsourcing jobs. People need to get educated about the great impacts that offshore outsourcing does to an economy. The global economy has started to thrive and offshore outsourcing has profited the consumers as companies want to cut costs and competition, which is why I support offshore outsourcing jobs to foreign countries.