Itm 5200

Topics: Outsourcing, Offshoring, Decision making Pages: 5 (1456 words) Published: February 10, 2013
Part 1
Part 1: Search the internet for the term "IT outsourcing". Find at least two articles that discuss outsourcing, whether beneficial or controversial. Summarize the articles and answer the following questions in a two to three page paper: Outsourcing is the lifeblood of IT. The prevailing theory is that outsourcing saves companies money and enables them to engage a broader pool of IT skills and talent than they could in-house.

Summary: The above article talks about how IT outsourcing is the most cost-effective way for companies to hire qualified individuals for specific jobs without having to commit to the significant cost or maintaining a year round in house team. IT outsourcing is also good for companies which are in the midst of a launching campaign, product, or new merger and need a large about of technical help in a small period of time. This article (above) outlines the risks and benefits of outsourcing IT functions. Among the risks are the facts that some IT functions aren’t outsourceable, control may be lost by the actual business, and employee morale may be affected. The benefits listed in this article include freeing up working capital for core business functions, saving time and money, and reducing risk. Overall, the article favors IT outsourcing, as the benefits outweigh the risks. ●What are the main types of goods and services being outsourced? ○The two main types of goods and services being outsourced are Technology Services, which includes electronics/e-commerce and information technologies and Business Processing Outsourcing, which deal with finance and accounting, procurement and supply, customer service/contact, and human resources. ●Why are the organizations in the articles choosing to outsource? ○Organizations especially small and medium businesses simply don’t have the budget to hire IT staff capable of managing any and all IT projects. Some projects require specific skills, and outsourcing is a solution that allows an organization to hire the best talent available only for as long as it’s actually needed. ○Another reason, organizations and businesses are choosing to outsource because it allows them to continue with more important activities within their organization without being hampered by other business functions that they can outsource, which allows them to save time and accomplish more tasks every work day. It is also important to note that outsourcing non-essential business functions save businesses time and money. By outsourcing non-essential business functions, companies also can free up capital that can be spent on core business functions. ●Have the organizations in your articles benefited from outsourcing? Why or why not? ○Yes, the companies in our articles benefited from outsourcing. As stated above, by outsourcing certain business functions it allows them more time and capital to focus on more important activities and also allows them to accomplish more tasks daily. Outsourcing IT needs reduces risk for non-IT companies by allowing IT professionals with experience and a need to keep up with the industry’s best practices handle the business’ IT functions. Part 2: Suppose your company is trying to decide whether it should buy special equipment to prepare some high quality publications itself or lease the equipment from another company. Suppose leasing the equipment costs $240 per day. If you decide to purchase the equipment, the initial investment is $6,800, and operations will cost $70 per day. After how many days will the lease cost be the same as the purchase cost for the equipment? Assume your company would only use this equipment for 30 days. Should your company buy the equipment or lease it? For Leasing:

Equipment cost/day = $240
Duration of lease = 30 days

so, total cost for leasing equipment = $240 * 30 days
= $7,200 for leasing

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