subject: Survey Of Outsourcing On Surveys And Studies On Information System [print this page] To address this, a survey was mailed to the CIO (or equivalent) of the 500 largest industrial firms in the United States. The results from the 110 responses received indicate the extent and effects of outsourcing among users of such services.
The survey also collected data about the outsourcing plans of nonusers. The survey provided information about the planning and implementation issues encountered, benefits achieved, and impact on performance. This study is a benchmark of current outsourcing practice.
In addition, this study tests some commonly accepted assumptions about the reasons for outsourcing, and the effects of outsourcing on the firm. Firms adopting this approach take activities that had been performed internally and turn them over to outside providers. This arrangement may be narrow in scope, or broad, encompassing the entire IS function.
Outsourcing is not a new practice. Firms have used, service bureaus for many years to perform pay roll and other routine processing rather than doing so themselves. However, changes in the business environment have led to an increased interest in this topic. One of these changes is the view that information technology when employed in new and different ways can be a competitive weapon and provide strategic advantage.
These heightened expectations require that the IS functional units provide higher quality information more rapidly than before, and at a lower cost. Faced with these raised performance requirements, managers at some firms have found their internal IS units improperly positioned to respond, and have turned to outsourcing.
Another change contributing to the increasing interest in outsourcing is the move by a number of organizations to focus on their core capabilities. Service staffs have been dismantled or reduced and replaced with market like relationships or by an outside firm. Simultaneously, the number of firm is offering to perform such services has grown substantially and it is commonly assumed that the market for their services is expected to increase.
Many of these vendor companies have entered the industry by expanding from their original service base, notably in equipment or consulting. While many of these firms are small, a number of the largest equipment manufacturers, including IBM and DEC, have entered this market by establishing subsidiaries.
Proponents of outsourcing suggest that as specialists in information services, these third parties can improve customer service, lower costs, improve asset utilization, enhance flexibility and provide access to leading edge technology. Supporting the proponents of outsourcing are a number of articles that have appeared describing the positive results achieved by some firms.
However, a number of other articles have depicted situations where these positive outcomes have not been obtained. These negative outcomes were to be expected, according to the opponents of outsourcing. Opponents believe that outsourcing will result in a loss of operational and financial control, less direct contact with customers, and substantial expenses related to terminating internal IS operations.
They further assert that such action will result in morale problems ,a loss of internal IS expertise, and too great a dependence on an outside provider. Both sides of the discussion are well argued, and case studies supporting each position have appeared in the literature, as noted earlier. Unfortunately, these brief case studies, while they are informative about the experiences of individual firms, do not describe the effects on the organizations and the senior IS managers of these firms in detail along the same dimensions across settings. It is difficult, therefore, for determine what the likely impact will be on their role, responsibilities, and organizations.
