Outsourcing

Every day on the news we hear about companies closing down factories and outsourcing jobs to places like Mexico, India, and China. But what we don’t really know is if the outsourcing really helps the bottom line. Iacouvou and Nakatsu researched different companies and their outsourcing efforts over the years in an attempt to see what the common errors made by companies and the company contracted to do the outsourcing.

To begin they examined the case of Life Time Fitness (LTF) who went with a company in India to develop a decision support system in hopes that the company would develop a tool that would allow Life Time Fitness to decide where the best places were to put their gyms. Soon LTF began experiencing problems with transfer of knowledge, communication errors, and inexperienced IT personnel. This ended up costing the company a great deal of money and they decided to end the contract with the Indian company without the decision support system that they had originally needed.

Outsourcing is a unique method of getting work tasks done outside the walls of the actual business itself and possibly even outside the boundaries of the business' home country. Of course telephones are one way to enable outsourcing of jobs, but the internet opened many new doors for outsourcing especially for the information systems field. Everything has its advantages and disadvantages. First, it is very beneficial for companies to have many potential providers for information systems services and workers because of price competition and the huge demand on this field. On the other hand, outsourcing and offshoring can create more problems due to increased risks, communication barriers and inhibitors, culture clashes, and lack of knowledge.

The two kinds of outsourcing, domestic outsourcing among other U.S. companies and overseas offshoring to other low-wage countries, both have their own effects on the information systems field. Of course outsourcing occurring in our own country is going to have a smaller impact on overall employment demand since most businesses may lose a couple of their own workers as larger servicing firms hire them. However, the offshoring will have a much greater impact on the demand, especially the technical area as opposed to the management area, because most people overseas are learning the technical parts of the field, how things work, how they can be fixed, and how they can be serviced as opposed to how to manage people who do those things. The managers are those who remain in our own country, but more and more people overseas are learning the "grunt work" of certain fields, information systems and customer service call centers just to name a couple, and causing more competition when it comes to seeking employment in those areas.

For these reasons the researchers in the above mentioned article outlined several risk factors that US companies should take into account when considering outsourcing. “As the findings indicate, the risks focus on three major areas of concern: the communication between the client and the vendor, the client’s internal management of the project, and the vendor’s capabilities” (Iacovou and Nakatsu 91).

In conclusion, when it comes to learning new information systems skills, in order to maximize ones employment potential, it is very advantageous to not only develop a vast knowledge of the technical aspect (hardware, software, systems functions, etc.) but to also place an equal amount of importance on the managerial skills one would need to design new systems, solutions and implement them while leading others to do the same things.