The major benefit of outsourcing is normally the reduction of costs and maximization of efficiency. To ensure its success, a company usually focuses on finding the best firm to contract a job.
The off-shore IT services should be handled with a lot of care as it serves as the back bone of the company. In the present age, emerging issues like computer crimes and increased government involvement in the private businesses has questioned the viability of out sourcing the IT services (Beaver, 2011).
In most cases, outsourcing usually revolves around the electronic assets of the company. This will include financial information or ideas. Therefore, Outsourcing greatly increases the chances of something going wrong. Since data is shared among various different users.
Therefore, it is evident that privacy is limited and loss of data is often looming. Even though most of the IT consulting companies are known to be trustworthy and responsible in nature, not all are perfect. A company may never fully know or comprehend the down side of the company it is outsourcing from. This is usually learnt after they suffer loss of data or violation of integrity (Wejman, 2006).
It is true that there is a relationship between IT outsourcing and outsourcing risks. By outsourcing a particular service, in this case the IT services, the company is always at significant risk. Topping the list of risks is that the company losses privacy of its confidential information. Additionally they are not fully aware of any hidden intentions especially from rouge employees who form the outsourced company.
When the IT services are held within the company, it is not exposed to such risks but after outsourcing or taking those services off-shore, they have entered into unknown waters. The risk level in outsourcing is therefore very high.
IT outsourcing is known widely to involve contracts hence the need to have lawyers to represent the clients on both sides to agree on the contract terms and conditions. The contracts are required to be formulated in such a way that they serve the interest of the two parties. The experience of the lawyers is vital as it goes an extra mile in pointing out to the client the various pitfalls in deals involved in outsourcing.
The terms are important as they protect the two parties from each other and they indicate their working environment. The contract between the two parties should explicitly indicate the work required to be performed, the time scale of the project (beginning and deadlines), the pay structure and cycle and method/ways of resolving conflict between the parties (Canadian Institute of Chartered Accountants, 2003).
Organizational Information Threats
There are risks that the systems might fail or due to lack of integrity, information may be tampered with. In relation to this, the organizations ability on constructing sound decisions is also jeopardized.since in an outsourcing scenario, functions are carried out by different personnel governed by different management and undertaken in a different environment.
In this kind of an arrangement, the employer instructs the outsourcing company to document its activities but in most cases, this may not be done as accurately as they wanted hence it may be substandard. The risk levels therefore are high (Canadian Institute of Chartered Accountants, 2003).
Performance of the organization is directly affected by all departments. Failure of one department might greatly affect the overall organizational goals of success. If outsourcing the IT service by the organization goes according to plan, the performance will be upheld. The outsourcing firm should be able to meet the defined standards of performance of the employer to ensure its relevance to the employer.
Beaver K. (2011) Outsourcing IT services: Is it worth the security risk? Retrieved from https://searchsecurity.techtarget.com/tip/Outsourcing-IT-services-Is-it-worth-the-security-risk
Canadian Institute of Chartered Accountants. (2003). Information technology outsourcing. Toronto.
Houseman et al (2006).Outsourcing, Offshoring, and Productivity Measurement in U.S. Manufacturing. New York; Sage.
Wejman, B. (2010) Continental Airlines: Outsourcing IT to Support Business Transformation. International Journal of Communication, 2 (1), 19-25.