Preview

Outsourcing of Information Systems - Risk Factors Analysis

Powerful Essays
Open Document
Open Document
6990 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Outsourcing of Information Systems - Risk Factors Analysis
Department of Graduate Studies Master Program in Business Administration

Management Information Systems
BUSA737

Outsourcing of Information Systems - Risk Factors Analysis

Prepared By:

Rasha Al-Hawash
Instructor:

1085202

Mr. Basem Sayrafi

Summer Course 2009

Table of Content

About this Paper Abstract Introduction
- Definitions - Reasons of Outsourcing - Factors affecting the Outsourcing Decision

The Risk of Outsourcing
- The Risk Factors along Outsourcing Project’s Life-Cycle - Risks affecting Outsourcing Projects - Recently Emerging Risks

Conclusion Recommendations References

2

About this Paper

In this paper I surveyed the literature for the recent research papers written about outsourcing information systems; the success factors and risk factors associated with outsourcing projects, with concentration on the risks encountered by outsourcing projects as reported in the most recent literatures. I will concentrate my study on the various risk factors that encounter the outsourcing firms; how these risks could be managed and controlled in order to exploit the success factors. To reach my goal in this paper, I’ll start by an overview of the reasons for outsourcing and the factors affecting the outsourcing decision, pointing out the outsourcing project life-cycle framework and some decision models developed in previous researches. This introduction will constitute the background that will lead to investigating the main issues aimed in this paper, which is the Risk.

3

Abstract

Firms compete to achieve higher profits and gain competitive advantages. Over years, various policies and procedures to achieve the competitive advantage, higher profit goal have been designed and followed up by firms. In the recent few years, outsourcing emerges as a popular new policy to achieving these goals. This research introduces the outsourcing concepts, reasons and factors affecting the outsourcing decisions as were found in a wide


References: Papers: 1. Robbie T. Nakatsu and Charalambos L. Iacovou. (2009). A comparative study of important risk factors involved in offshore and domestic outsourcing of software development projects: A two-panel Delphi study. Journal of Information & Management. 46 (1), 57-68 2. David C. Chou and Amy Y. Chou. (2008). Information systems outsourcing life cycle and risks analysis. Journal of Computer Standards & Interfaces. 31 (5), 1036-1043 3. Alison Rieple and Clive Helm. (2008). Outsourcing for competitive advantage: An examination of seven legacy airlines. Journal of Air Transport Management. 14 (5), 280-285 4. Y. Shi. (2007). Today’s solution and tomorrow’s problem: the business process outsourcing risk management puzzle. California Management Review. 49 (3), 27– 44. 5. Jian-Jun Wang and De-Li Yang. (2007). Using a hybrid multi-criteria decision aid method for information systems outsourcing. Computers & Operations Research. 34 (12), 3691-3700 6. W. Oh, M.J. Gallivan, J.W. Kim. (2006). The market’s perception of the transactional risks of information technology outsourcing announcements, Journal of Management Information Systems. 22 (4), 271–303. 7. Reyes Gonzalez and Jose Gasco and Juan Llopis. (2005). Information systems outsourcing reasons in the largest Spanish firms. International Journal of Information Management. 25 (2), 117 – 136. 8. Kweku-Muata Osei-Bryson and Ojelanki K. Ngwenyama. (2005). Managing risks in information systems outsourcing: An approach to analyzing outsourcing risks and structuring incentive contracts. European Journal of Operational Research. 147 (1), 245-264 9. Jérôme Barthélemy. (2003). The Hard and Soft Sides of IT Outsourcing Management. European Management Journal. 21 (5), 539-548 24 10. Gupta, G., & Gupta, H. (1995). Outsourcing the IS function. Is it necessary for your organization? Information Systems Management, 9 (3), 44–50. Websites (for the “Recently Emerging Risks” section because of the lack of references): 1. “Grid staff in outsourcing protest”. BBC News website. 2009. http://news.bbc.co.uk/2/hi/uk_news/england/tyne/8170008.stm 2. Stephanie Overby. “The Truth about Obama’s Tax on Outsourcing speech “. IDG News Service. 2009. http://news.idg.no/cw/art.cfm?id=35CD75AF-1A64-6A71-CE1AB4F51166D378 3. The video of Barack Obama Speech Dan Fisher. (2009). No to Bangalore, Yes to Buffalo. Buffalo Rising Website. http://www.buffalorising.com/2009/05/no-to-bangalore-yes-to-buffalo.html 4. Liam Clarke. (2009). If You Ask Me. BBC News Website http://www.bbc.co.uk/northernireland/tv/programmes/heartsandminds/ifyouaskme /20090305.shtml 5. Gary Zeiss. (2008). Is Barack Obama Anti-Outsourcing?. Outsourcing Weblog. http://www.outsourcingweblog.com/50226711/is_barack_obama_antioutsourcing.php 25
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Better Essays

    Cmmt 578 Week 4 Paper Outsourcing
    • 1088 Words
    • 5 Pages

    Cmmt 578 Week 4 Paper Outsourcing

    There are several factors for a company to outsource their IT department like: cost, quality, global events, resource management, ability to hire/maintain employees, and agility, etc. A company can reduce the cost of their IT department by outsourcing different aspects of their IT needs. However when a company decides to outsource different aspects of their IT department they need to complete extensive research in order to make sure that they are going to receive quality work and that the outsourcing will save the company money. By outsourcing a company can offer their customers access to technical support for their product 24/7. Another…

    • 1088 Words
    • 5 Pages
    Better Essays
    Read More
  • Better Essays

    CMGT578 Week2 Assignment
    • 822 Words
    • 3 Pages

    CMGT578 Week2 Assignment

    In this current IT technology driven age, companies whose primary core competency is not technology may have a difficult time operating and maintaining an IT environment that would give them a competitive advantage in the market place. A large company like Hess, whose mission statement is “…a global company devoted to exploring oil, gas and energy solutions”, would have a difficult time living it’s mission if it was too concerned with how to run their IT infrastructure and the impact it has on their marketing, sales, public relations, communications, and operations capabilities. However, each company must access their unique situation and environment to determine if IT outsourcing is the method going forward. There can be immense fiscal and operational benefits, but also significant risks.…

    • 822 Words
    • 3 Pages
    Better Essays
    Read More
  • Good Essays

    DOCTORATE DDBA 8120 1 KNOWLEDGE TECHNOLOGY FOR AGGRESSIVE IMPROVEMENT 3

    • 2426 Words
    • 8 Pages

    DOCTORATE DDBA 8120 1 KNOWLEDGE TECHNOLOGY FOR AGGRESSIVE IMPROVEMENT 3

    Tafti, M. H. A. (2005). Risks factors associated with offshore IT outsourcing. Industrial Management & Data Systems, 105(5/6), 549–560. Retrieved from ABI/INFORM global database.…

    • 2426 Words
    • 8 Pages
    Good Essays
    Read More
  • Better Essays

    Bus 630: Managerial Accounting
    • 2422 Words
    • 10 Pages

    Bus 630: Managerial Accounting

    The pros and cons of outsourcing varies by industry, size of organization, organizational structure, and many other components. The pros and cons are highlighted and the fall of Satyam to encompass a full range of accounting aspects. All size organizations outsource a portion of his or her business. Therefore, taking time to reflect on the points identified in this paper may enlighten or create ideas for consideration regarding outsourcing.…

    • 2422 Words
    • 10 Pages
    Better Essays
    Read More
  • Good Essays

    Lego Final
    • 1719 Words
    • 5 Pages

    Lego Final

    Outsourcing is not a good strategy in the following situations: The risk to expose confidential data is high such as outsourcing HR, payroll and recruitment services. Risk of exposing intellectual property increases which…

    • 1719 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Case Study: Briargrove Computer System Failure Fix Plan
    • 3443 Words
    • 14 Pages

    Case Study: Briargrove Computer System Failure Fix Plan

    Project risk management helps on risk identification and assessment to see which ones can be mitigated or corrected, and how to monitor if there is a probability of occurrence. In the case of outsourcing resources, risk mitigation is needed in order to look and review efficiency and cost of the services and equipment that will be outsourced. However, to be able to use the risk assessment matrix it is essential to ensure that risk is accurately measured. The project will evaluate the suitability and potential of outsourcing human capital, Information…

    • 3443 Words
    • 14 Pages
    Good Essays
    Read More
  • Powerful Essays

    Offshore IT Outsourcing
    • 5393 Words
    • 22 Pages

    Offshore IT Outsourcing

    Running head OUTSOURCING INFORMATION TECHNOLOGY OFFSHORE The Impact of Outsourcing Information Technology Offshore Strayer University Abstract This study explores Offshore IT Outsourcing by U. S. companies. Within the study, information will be provided on the details of Offshore IT Outsourcing including the advantages and disadvantages. It also evaluates different strategies for offshore Information Technology Outsourcing that could benefit both U. S. employees and employers. This study utilized qualitative information provided by a number of internet journal articles and other studies that provide research on the performance of Offshore Outsourcing. Within this study, library resources include electronic and computer database searches.…

    • 5393 Words
    • 22 Pages
    Powerful Essays
    Read More
  • Good Essays

    Linear Programming and Capacity
    • 898 Words
    • 4 Pages

    Linear Programming and Capacity

    We've analyzed our potential suppliers for each gauge, taking into account their capacity, cost of production for each plant, and transportation costs (The model and our objective function can be found in the appendix.) Our goal was to allocate spinning production (at Filatoi Riuniti and six local mills) in a manner that would minimize overall costs, while meeting the demand and operating within the capacity constraint of each plant. Given the output of our optimization model, we should be outsourcing the spinning of our yarn in this way:…

    • 898 Words
    • 4 Pages
    Good Essays
    Read More
  • Better Essays

    ResearchPaper

    • 1463 Words
    • 5 Pages

    ResearchPaper

    Oshri, I., Kotlarsky, J., &Willcocks, L. P. (2011).The handbook of global outsourcing and offshoring.UK: Palgrave Macmillan.…

    • 1463 Words
    • 5 Pages
    Better Essays
    Read More
  • Better Essays

    Outsourcing Harms and Threats the United States’ Economy
    • 1212 Words
    • 5 Pages

    Outsourcing Harms and Threats the United States’ Economy

    However, a growing trend in the economy about the negatives of outsourcing cannot be ignored by public. Three of the most important negative effects are the risk of losing key skills to competing for the future, the risk of decreasing the employment of U.S as well as the threat of national competitive and safety.…

    • 1212 Words
    • 5 Pages
    Better Essays
    Read More
  • Powerful Essays

    Why Is Shared Information So Important In A Learning Organization In Comparison To An Efficient Performance Organization Case Study
    • 2062 Words
    • 9 Pages

    Why Is Shared Information So Important In A Learning Organization In Comparison To An Efficient Performance Organization Case Study

    pg. 120). Outsourcing can be defined as having activities that were formerly done inside the organization now performed by an external supplier. The most common motive and proclaimed benefit of outsourcing concerns cost reduction, due to a supplier’s superior economy of scale. Other motives are release of resources and avoidance of investments (Bengtsson & Dabhilkar, 2009). Outsourcing is often thought of something that major companies and corporations do, but even small companies outsource activities such as payroll, customer care, and information technology. Other activities that are often outsources are marketing and research and development. Examples of outsourcing activities that tend to be outsourced are street maintenance, policing, and public safety. Other types of businesses outsource activities such as cleaning and catering services. With business globalization and the advances in information and communications technology, this has led to a growing trend for businesses within specific sectors to outsource abroad. With the attraction of cheap labor and minimal overheads, this appears to have overcome any worries pertaining to control factors (Ball, 2005). I have a family member whose company has recently started the process of outsourcing to their location in India. Prior to her relocating to TX, she and her family had been…

    • 2062 Words
    • 9 Pages
    Powerful Essays
    Read More
  • Good Essays

    What Is Strategic Management?
    • 7197 Words
    • 29 Pages

    What Is Strategic Management?

    There is no single, universally accepted definition for strategy. Some understand it as a deliberate plan, drawn up to achieve set goals, others see it more as a process, whereby a company’s decision and actions are made in alignment with opportunities or threats in the industry. Even others define it as a pattern of consistent actions in decision-making and lastly there are those with a military view of strategy, who consider it a manoeuvre to beat and outsmart the competition (Parthasarthy, 2006). By drawing from each of the definitions, one could say that strategy and by extension, strategic management, is constituted of short-term strategies involving managing and planning for the present and long-term decisions and actions, made, taken and implemented by managers to achieve superior competitive advantage, compared to their competitors.…

    • 7197 Words
    • 29 Pages
    Good Essays
    Read More
  • Powerful Essays

    Logistics Outsourcing: Lessons from Case Studies
    • 7595 Words
    • 27 Pages

    Logistics Outsourcing: Lessons from Case Studies

    process, the model is refined by the analysis of implementation of outsourcing methodology and the analysis of the presence of outsourcing…

    • 7595 Words
    • 27 Pages
    Powerful Essays
    Read More
  • Good Essays

    The Innovative Organization Review
    • 870 Words
    • 4 Pages

    The Innovative Organization Review

    This article is examining about the recent business trends that acquired attention from companies worldwide which are the practice of outsourcing and offshoring. Businesses applied these kinds of practices in order to procure efficiency. In fact, several examples of failed outsourcing and offshoring occurred over the life of it. By offering strategic frameworks of the activities, Tradelis believes that the people reading his article could wisely consider which strategy the company uses in order to give a success to managers while innovating the sourcing activity effectively and efficiently.…

    • 870 Words
    • 4 Pages
    Good Essays
    Read More
  • Powerful Essays

    21st Century Organization
    • 2828 Words
    • 12 Pages

    21st Century Organization

    Lacity, M. C., and Hirschheim, R. A. (1993), "The Information Systems Outsourcing Bandwagon", Sloan Management Review (Fall), 73-86.…

    • 2828 Words
    • 12 Pages
    Powerful Essays
    Read More

Related Topics