Page 70 - DCAP307_PLANNING_AND_MANAGING_IT_INFRASTRUCTURE

Planning and Managing IT Infrastructure

Notes
Example: There may be a language barrier that leaves customers feeling less satisfied
when dealing with an overseas call centre.
Proponents of offshore outsourcing assert that such criticism may be displaced. For example,
while some critics claim that overseas outsourcing is responsible for significant levels of job
loss, some proponents point to recessions, dot.com fallout, and productivity growth as the real
culprits. In fact, some critics claim that offshore outsourcing actually helps the economy in two
ways. First, they assert that it lowers costs for everyone across the board. Second, they claim that
it creates jobs by making the economy more efficient.

At this time, it looks as if overseas outsourcing will only grow with time. Some experts predict
that about one-quarter of IT jobs will be overseas in a few years. However, many experts also
suggest that companies proceed slowly and with caution to avoid the loss of talent and preserve
performance.

Notes Some small businesses may find ways to use offshore outsourcing to make their
businesses more competitive, especially in markets that are currently dominated by large
corporations.

Self Assessment

Fill in the blanks:

4. ..................................... is the practice of hiring organisations or employees to perform
company tasks overseas.
5. The ..................................... category involves the overseas outsourcing of a company’s
information technology.
6. The ..................................... category involves business process outsourcing, which can include
call centre management and claims processing.

4.3 Need of Outsourcing

The first and foremost reason why companies outsource their processes is the significant and
even massive cost reduction that results from outsourcing jobs, processes, businesses, etc. But
why is it so? Well, outsourcing lets a company to focus on their core expertise like IT, Hotels,
Health, etc. while letting people manage other peripheral (not necessary services nonetheless)
services like data entry, employee database, housekeeping, customer support and so on. Such
Off sourcing allows the company to turn fixed costs into variable ones, reduces the burden of
managing a large workforce and extending them the various company benefits. In fact most of
the top companies prefer low-cost destinations like India for their outsourcing needs, whether
BPO or other, as they can cut back on a lot of overheads like worker benefits, maximum working
hours, etc.
Apart from this Business Process Outsourcing (BPO) and other outsourced processes is an
opportunity to get a foot hold in any new country by making new clients (in the form of service
providers), setting up new business offices, understanding the domestic market and so on.
Organisations decide to outsource for many reasons. Three of the most frequently cited reasons
are to cut or stabilise costs, improve the firm’s focus on core operations, and upgrade the firm’s
capabilities and services.

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