Outsourcing basically means a process of constricting to another party. It is done at the outsourcing client’s location under their supervision. There are many essential factors which are needed to decide whether to outsource the information process or not. First major factor is the activity or the process itself. Main concern should be the process, whether it’s really needed to be outsourced (Loh et. al, 1992). If it is core job to that organization, then its better not to outsource it.
If the task really requires highly efficient skills which is not available in your organization, then it’s better to outsource it. Second most important factor is the financial strategy. While deciding whether to outsource, main goal of company is to save money. It’s essential to verify, what will be the total cost in both the cases, if the task to be performed within the organization or outside. Hence, the main factors for deciding why to outsource are outsourcers cost, their capabilities and the potential end product which ultimately will reduce the risk and increase organization profit.
Influence of Risk Assessment on the decision making process when seeking to outsource information processes Risk is always associated with the process of outsourcing. Many organizations who went for outsourcing, failed and few of the reasons are like cultural misalignment, end product not as per the quality and deadlines or delivery times missed. There are mainly two types of risk associated with the process of outsourcing: external risk and internal risk.
External risks are those risks which occur outside the organization and upon which organization do not have any control. these risks includes a search of outsourcer who will offer the required skills in a cost effective manner, an exchange rate fluctuation that can impact the cost savings, lack of ability to guard organization intellectual protection property and physical location of outsourcer which includes economic and political risk as well (Aubert, 1998). Internal risks are those risks which occur inside the organization while outsourcing.
Language is the most targeted risk if outsourcing happen between two different countries where English is not the primary language and the ability of communicating to outsourcers in a remote location where technology is not so updated. Influence of change management requirements on the decision making process when seeking to outsource information processes One of the key factors for a successful outsourcing is the organizations effective change management policy. Organizations who failed to manage the changes effectively suffer a lot.
Within an organization, the most important change management program is to create such a reliable communication strategy, so that the employees don’t feel scared about the job security. There should be proper redeployment and retention plans for all employees to make them feel secure. Proper training should be provided to make them understand how to deal with outsourcers. Few change management factors during this process are good leadership quality, crystal clear procedures, strategy safeguarding stakeholder’s interests, communication strategy and a change-over course of action for every step (Wullenweber et al, 2008).
Inclusion of different entities by business when making decisions on the processes to outsource and the third party entity to outsource to Businesses include entities when time comes to decide whether to go for outsourcing or not. When an organization needs a process to be outsourced, decision of top level (CEO or a Director) is essential. Without their confirmation, company can’t think of moving ahead. After the confirmation, now its middle management turns to check whether all the important factors are going in favor of outsourcing or not.
Here come different entities like finance, Hr, marketing, quality and third party. Finance department will check outsourcing in terms of cost saving, while HR will check if the company really needs outsourcing staff or it has its own (DiRomualdo et. al. , 1998). Marketing people will do a survey to acquire a list of best outsourcing companies and quality will judge whether the decision is anywhere hampering the quality and how to improve it in future. Third party will also play a vital role as their location, cost of doing outsourcing and few other factors will also effect the decision (W. McFarlan et. al, 1995).