Page 69 - DCAP307_PLANNING_AND_MANAGING_IT_INFRASTRUCTURE

Unit 4: Business Process and IT Outsourcing

Self Assessment Notes

Fill in the blanks:
1. .............................................. is a process where an organisation sub-contracts certain functions
or processes within a business to a specialist, third-party Company.

2. IT outsourcing is also sometimes known as ..............................................
3. The role of .............................................. support is to allow end users to contact a support
line to solve a problem, generally over the phone.

4.2 Offshore Outsourcing

Offshore outsourcing, a type of Business Process Outsourcing (BPO), is the exporting of IT-
related work from the United States and other developed countries to areas of the world where
there is both political stability and lower labour costs or tax savings. Outsourcing is an
arrangement in which one company provides services for another company that could also be
or usually have been provided in-house. Offshore simply means “any country other than your
own.” The Internet and high-speed Internet connections make it possible for outsourcing to be
carried out anywhere in the world, a business trend economists call globalisation. In general,
domestic companies interested in offshore outsourcing are not only trying to save money in
order to be more price-competitive against each other, but also to enable them to compete with
businesses in other countries.

Offshore outsourcing is the practice of hiring organisations or employees to perform company
tasks overseas.

Example: A company may manufacture and sell computer parts in the United States yet
use offshore outsourcing to handle its customer service and technical support phone lines.

Data entry is another job that is frequently outsourced overseas. The Internet has played a major
role in outsourcing to other countries, not only allowing companies to outsource work to other
organisations and hire employees that are some distance away, but also making is easier to hire
freelance workers from around the world, getting projects completed for significantly lower fees.

Example: Offshore outsourcing includes telephone call centres, tech-support and computer
programming. More common examples that are not going overseas are janitorial services, after
hours answering services and security services.
Offshore outsourcing is often broken up into four main categories. The ITO category involves
the overseas outsourcing of a company’s information technology. The BPO category involves
business outsourcing, which can include call centre management and claims processing. Software
development falls under the Software R&D (research and development) category
while KPO covers knowledge process outsourcing, which typically involves processes that
require a higher level of skill, experience and/or knowledge. These things may include
interpreting x-rays and researching investments; they may also include accounting-related tasks
or even more technical jobs like engineering.
Often, offshore outsourcing get bad press when companies send work to other countries where
they can pay lower wages than are typical in the country in which they are based. Opponents
assert that outsourcing overseas takes jobs away from domestic employees and may even hurt
the economy. However, this setup isn’t criticised only for wages. Some consumers oppose this
type of outsourcing as well, asserting that it leads to a decrease in quality, especially when it
comes to customer service and technical support.

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