Free Business Dissertations - Businesses Today Are Given Several Options To Take In Order To Stay
Businesses today are given several options to take in order to stay competitive. They can either stick their mind to traditional methods of managing and protecting their business processes in-house or they can let the experts handle the jobs for them. Some organisations can delegate some of these functions not only to individuals but to highly specialised and lean organisations. This change of management strategy sometimes can lead to a better performance and economic prosperity or it can also lead to loss of profit to total failure and disaster.
In today’s highly competitive business landscape, most of the concerns of managers and company executives are to minimize spending especially with regards to handling costs associated with IT applications and functions. Often, these IT spending are centered on paying for the salaries of the IT staff and their continued training, acquisition and development of software packages and hardware equipments, and other costs associated with maintaining and handling information and communication technology or ICT.
Spinning off business function, services, and IT applications to third-party entities may sound new but the concept itself may be old. According to the Department of Information Resources in Texas (1998), outsourcing was primarily used to contract for data center services and facilities management, as external vendors provided economies of scale for mainframe use. It was in the 1980s that outsourcing expanded to include the goal of using only external resources, and services to develop and manage all IT activities. During those times, the cost of owning IT equipments and services is cost-prohibitive. Only those who are financially capable of investing in IT were in a better position to take advantage of information technology methods and skills.
Outsourcing as an alternative for today’s businesses has become a standard feature in the modern organisation. Often, moves to integrate outsourcing within the overall strategic management of an organisation can be highly controversial. Researchers on outsourcing may tend to favor the use of it because of the perceived and actual benefits. Others are not so sure yet of its long term effects.
According to Dwyner and Tanner (1999, p.76), outsourcing is the process of finding another organisation to supply the buying organisation with a product or service, usually one that was previously created in-house. Outsourcing is a strategic trend, caused in part by a trend in strategy where companies focus on their core businesses.
Although most outsourcing issues are centered on transferring management and handling of technology to highly specialized organisations, it often involves other departments and offices like human resources.
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