...efficient communication system among various corporate departments and suppliers. World class IT can be different from one company to another. What works for a small business as world class IT department might be an inferior IT performance for a large multinational corporation. There are five principles that IT department must do to provide its objectives to the company to be called world class IT department: First: Recruit and retain world class IT employees; Second: Build and maintain a robust IT infrastructure; Third: Manage projects and portfolios effectively; Fourth: Ensure partnerships within the IT department and with the business; and Fifth: Develop a collaborative relationship with external partners.(1) In this article I will choose to explain and analyze the fifth principle: developing a collaborative relationship with external partners and explain its meaning, and objectives. In this principle, IT management would determine if outsourcing is worth it or not for the company. Investopedia defined this function as : “Outsourcing is an effective cost-saving strategy when used properly. It is sometimes more affordable to purchase a good from companies with comparative advantages than it is to produce the good internally” (2) Outsourcing company’s IT functions can be easy and cost efficient to some companies but not to others. In some companies outsourcing skills that current employees lack makes business sense. The...
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...OUTSOURCING RISKS As Information Technology professionals, we have accepted the fact that there is some sort of risk involved with data. This is why we deal with risk assessments and analysis, implementing risk plans, and maintaining them to reduce, avoid, mitigate and accept the risks as we deal with the data. Now, the company can address these issues to the best of their ability by checking network configurations routinely and upgrading their security as soon as an upgrade is available. They might even be able to reduce vulnerability even before it rears its ugly head, but what happens when a company decides to outsource some of their work to third party vendors such as business functions and private client information? Even though your company has a stellar track record for security for the business operations they control, they put themselves in a vulnerable position by outsourcing their work, because then you are only as secure as your outsourced business partners. In this paper we will discuss the outsourcing risk of the use of an external service provider for your data storage, the use of an enterprise service provider for processing information systems applications, the use of vendors to support your desktop computers, and the use of a vendor to provide network security. Outsourcing Data Storage A company that secures its valuable assets and protects their secret information within the four walls of the building allows themselves to be vulnerable as soon as they outsource...
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...ABSTRACT While outsourcing internal audit function in the private sector has been extensively Investigated by various researchers (Carey and Chua, 1999; Petravick, 1997; and Sharma and Subramaniam, 200l; amongst others), there is scant empirical data from the public sector. This study attempts to fill the gap by providing some preliminary evidence in food and beverages industry. Using responses from 3 firms which includes Dangote flour mills, UAC and Northern Nigeria flour mills plc, the study found that more than 85% of the respondents had either fully outsourced or co-sourced their internal audit function. Further, non-department entities were found to more likely to fully outsource their internal audit function than the departments. Lack of technological know-how and service quality of external providers seem to outrank cost-related factors as reasons for outsourcing. The study also raises several issues in relation to a lack of segregation of duties in the process of selecting and monitoring outsourced arrangements. Implications for policy setting and avenues for future research avenues are discussed. INTODUCTION In today’s business environment, outsourcing processes to a third party has become relatively commonplace. The practice gives organizations an opportunity to gain efficiencies, improve performance, lower costs, and focus on core competencies. Many businesses, however, fail to complete necessary due diligence work before the outsourcing relationship begins and neglect...
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...Introduction: In this essay, the discussion will focus on the vertical chain of a major pharmaceutical company as well as TCE and its effect on make or buy decision. The vertical chain is ‘’ the process that begins with the acquisition of raw materials and ends with the distribution and sale of finished goods and service.’’ (Besanko et al, 2010, p119) The term vertical integration is used to describe firms that produce and sell their goods without relying on external co-ordination. Firm’s vertical boundaries can identify what to make (internally inside the organization) and what to buy (externally by using the market). Some of the pharmaceutical companies like Pfizer have strong vertical chains. So as to market its drugs in 150 countries, it gives high importance for production that starts by acquiring active pharmaceutical ingredients (API) and shifting them to manufacturing sites all across the globe. These manufacturing sites are either approved under the stringent laws of FDA or EMEA (2 important bodies responsible in monitoring the quality of registered products across the globe). Sometimes Pfizer also uses loan-licensing companies as external manufacturers when in-house facilities are not available or feasible. Once the product is manufactured, it is sent for quality control release and then packed and shipped to the first point of distribution (global hubs). From these locations; depending on the demand from each region; packed products (formulated products) move...
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...The lesson we can derive from this case is that outsourcing is not just a wage difference between two places but skills and attitudes. Finally, there are a large number of US companies buying professional services from Asian countries. Clearly, skilled workers will be found and hired wherever they are. Countries, such as, India, Pakistan and China are good labor pools (Prahalad 2005.) It follows that multinational and global companies will find skilled labor overseas and start operations or buy services in foreign lands. Qua hay The influence of outsourcing should be recognized. Whirlpool, for instance, has a global network, supplies washing machines from Germany, and microwave ovens designed in Sweden that are and made in China while other appliances come from Brazil. Global companies develop first-rate centers of production and design in various countries. Countries that are abundant in human capital with a supplier base have a chance to become first-rate centers. Within this framework, designed to promote a global network, financing depends on corporate profits and funds owned by prospective partners. Du Pont, for instance, raises funds through joint ventures but retains corporate control by retaining at least 51% of the share. The importance of outsourcing and globalization is that some market imperfections are removed. When imperfections are removed, prices converge. This means that factor price differentials in...
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...REPORT ON OUTSOURCING Executive Summary Out sourcing can be defined as taking services of third party in order to get the solution or task done on time without hiring employees permanently in an organization. This paper is based on a case named “report on outsourcing”. In this case a manger wants to get an advice regarding the future of outsourcing in an organization. As per the current trend in the industry, outsourcing is the best way to get work professionally from experts all over the world. E-HRM is the term that defines “outsourcing HR” more technically. This paper includes academic journal articles and other literary sources; in addition company analysis examples are also included in this task. The issues discussed in particular are the evaluation of HRM factions in terms of outsourcing. Table of Contents Executive Summary 1 Introduction 3 Discussion 4 Concept of Our Sourcing 4 HR Fuctions Generally Outsourced 5 Recruitment 5 Training 5 Learning 6 Advantages and Disadvantages of HR Outsourcing 7 Advantages of Outsourcing HR 7 Disadvantages of Outsourcing HR 9 E-HRM 10 Role of E-HRM in Outsourcing HRM Function 11 Advice to the Client 13 Case Scenario Summary 13 Advice 13 Conclusion 16 References 18 Report on Outsourcing Introduction The Intelligent outsourcing is the use of contracted resources, assets and capabilities of a third party, guaranteed quality criteria, performance and value levels against the cost, as well...
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...HR OUTSOURCING HR outsourcing is the process of sub-contracting human resources functions to an external supplier. Different HR functions that can be outsourced: One can outsource various HR functions depending upon the expertise required. Recruitment is unarguably the most common functions outsourced. However, it is functions like payroll, leave tracking, record keeping, etc. Recruitment: Outsourcing recruiting makes a lot of sense. The organization will always have the final say in the selection of the candidate, but the screening of resumes, and initial selections can be completely outsourced. Then there are also entrepreneurs who believe that recruitment should never be outsourced to an external party as they cannot fully understand the culture of your organization and will fully understand your requirements. Administration: This includes maintenance of employee master payrolls, tracking of leaves, any kind of employee redressal and grievances, entry and exit process, paying provident fund and life insurance, and so on. These are people- and effort-intensive activities that can be mastered over a period of time. This is the reason why it makes sense to outsource it to a service provider. Strategy: This includes setting up a performance management system, building an employee handbook, and undertaking activities that offer value addition for employees. A number of strategic drivers for outsourcing HR services are: 1. Reduced cost 2. Increased efficiency ...
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...Risk Analysis for Outsourcing Decisions Linda Duvall CMGT/442 Mr. Thomas Maricle February 23, 2011 Abstract The purpose of this paper is to identify the possible risks to an organization in each of the following outsourcing situations: a) the use of an external service provider for your data storage; b) the use of an enterprise service provider for processing information systems applications such as a payroll, human resources, or sales order taking; c) the use of a vendor to support your desktop computers; and d) the use of a vendor to provide network support. The paper will include a risk mitigation strategy for each situation. Risk Analysis for Outsourcing Decisions “Outsourcing”, as defined by Wikipedia, the free encyclopedia, is the contracting out of a business function to an external provider. In this sense, two organizations enter into a contractual agreement involving an exchange of services and payments. Paul Strassmann, in his paper “The Squandered Computer” would prefer the term “out-tasking” because one organization is utilizating the specialization of another organization. According to “Microsoft Business for Small and Mid-Size Companies”, small business owners are outsourcing a range of services, from Human Relations to finance and accounting to customer services. Small businesses can now tap outside facilitators for a much greater range of services. As an example, entrepreneurs with strong sales often assume a full-time...
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...portion of the banking industry. (Bowen and Hedges, 1993). The trend of world markets has changed noticeably from agricultural to service markets (Asian Development Outlook, 2007). All of the service businesses are trying their best to improve their service quality in order to make customers satisfied with their services, especially the banking sector. Banks now focus more on the quality standards in order to meet the basic needs and expectations of the customers. Once customer’s requirements are clearly identified and understood, banks are more likely to anticipate and fulfill their customers& needs and want (Juwaheer & Ross, 2003). The more satisfied the customers are, the more likely they are to return or prolong their stay with the company. Organizations are therefore increasingly being more customer-centric and are much interested not just in acquiring new customers, but more importantly, retaining existing customers. This is perhaps because it costs more to attract new customers than to retain existing ones. (Juwaheer & Ross, 2003) were of the view that the average business spends six (6) times more to attract new customers than to retain old customers. Again it is more profitable retaining an old customer who is more likely to re-purchase or re-use a company’s products/services and recommend them to others. Customer retention is, therefore, basically a product of customer loyalty and value which in turn is a function of...
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...techniques to plan and control electronic commerce activities • Staffing electronic commerce activities Lecture Notes Planning the Electronic Commerce Initiative A successful business plan for an electronic commerce initiative should include activities that will identify the initiative’s specific objectives and link those objectives to business strategies. In setting objectives for an electronic commerce initiative, manages should consider the strategic role of the project, its intended scope, and the resources available for executing it. Linking objectives to business strategies Benefit objectives might include building brand awareness or enhancing existing marketing and promotional programs. Some companies plan to sell products, services, and advertising, whereas others establish online auctions or create virtual communities and Web portals. Other common organizational objectives are related to purchasing functions and supply chain management, as well as improving after-sale support services. No matter which set of strategic objectives an organization selects for its electronic commerce initiative, the cost objectives must be identified and matched against both alternatives and benefits. A project budget is frequently used to make this kind of analysis. In addition to hardware and software costs, the project budget must include the cost of hiring, training, and...
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...Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers (frequently, and originally, military organizations). Logistics involve the integration of information, transportation, inventory, warehousing, material-handling, and packaging. Logistics is a channel of the supply chain which adds the value of time and place utility. Origins and definition The term "logistics" originates from the ancient Greek " " ("logos"—"ratio, λόγος word, calculation, reason, speech, oration"). Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘Logistikas’ who were responsible for financial and supply distribution matters. The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.”Another dictionary definition is: "The time related positioning of resources." As such, logistics is commonly seen as a branch of engineering which creates "people systems" rather than "machine systems".... Military logistics In military logistics, logistics officers manage how and when to move resources to the places they are needed...
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...Terminology: Organizing the Chaos Learning the appropriate terminology is important in any undertaking. This section is a comprehensive glossary of terms used within BPO circles, each explained concisely. Business Application Outsourcing Company A (vendor) rents applications to Company B (user). Increasingly corporations are renting applications like enterprise resource planning, customer relationship management, messaging and collaboration, and e-business. The outsourcer provides the mission-critical enterprise application hosting and management. The goal is to relieve the corporation from day-to-day management and lower the total cost of ownership (TCO). The outsourcer hosts the software solution ensuring a preset level of performance and reliability. This is also termed application service provider (ASP) service. Business Process Outsourcing Business process outsourcing means examining the processes that compose the business and its functional units, and then working with focused service providers to both re-engineer and outsource these at the same time. BPO involves the full transfer of responsibility for functions such as transaction processing, policy servicing, claims management, HR, finance, and compliance to the outsourcing company. The outsourcing provider then administers these functions on their own systems to agreed service standards and at a guaranteed cost. Some of the BPO contracts call for performance-based payouts, tying vendor payments to business performance...
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...Outsourcing Teresa McGlown BUS 630 Wendy Achilles 08/27/2012 Table of Contents Introduction 1 Forms of business aspects covered by outsourcing 1 Outsourcing with reference to Hechlinger, J. Article 2 Other articles highlighting the application of new learning with respect to outsourcing 3 Dean Meyer’s Article highlighting the advantages of outsourcing 3 Sholstica’s Article highlighting the disadvantages of outsourcing 6 Present and future application of outsourcing within workplace 6 Conclusion 7 References 8 Outsourcing Introduction In the present dynamic environment, one way the companies can gain competitive edge over their competitors is by taking full advantage of all the business aspects. One of such possible aspect of performing organizational activities in an efficient manner is through the platform of outsourcing that provides a company an opportunity to hire an outside firm having proficiency in a particular field and then getting some of the organizational tasks completed through this hired firm either at a reduced cost or an increased productivity rate. A number of factors (both related to internal and external environment) are considered that helps to decide that whether outsourcing is a right answer for a particular company. The process of outsourcing facilitates learning of a number of aspects that if properly applied within an organization can serve as a competitive element for the company, enabling them to remain a competitive force within...
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...Outsourcing 1/60 ABSTRACT: The main focus of this project is investigating and exploring the impact of outsourcing on one of the most iconic Danish companies (LEGO), which attracted our attention during the preparation of this project. We decided to focus on a single case study, because we felt that dividing our efforts by investigating more than one company, would not allow us to focus in sufficient detail on the domino effects that outsourcing can have on a singular institution. The main question of this project is “How could LEGO improve the Make-or-buy- decision and the relationship management when it comes to outsourcing”? In order to answer the main question, we must consider two sub-questions stemming from the main issue, namely: “How could LEGO improve the decision-making-process to outsource by taking more influencing factors into consideration?” and “What could LEGO have done differently in its relationship to the outsourcing vendor Flextronics”. We used the Case Study Research method to work on these questions. Doing that, we reviewed theories, which explained the phenomenon of outsourcing on a theoretical basis. After creating a theoretical framework and the database, we analyzed the case (LEGO) for parallels between the theories and their practical experience. Finally, we were able to drawn some conclusions to both the central and subsidiary questions initially posed. In summary, it can be said that LEGO did not take all aspects into...
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...Problems of Offshore Outsourcing Abstract: Offshore outsourcing is one of the hot topics influencing the global environment, politically, economically, and socially. While offshore outsourcing is associated with several benefits, these ventures also pose many risks. In this report, I am going to discuss various factors affecting the offshore outsourcing, including risks involved, the challenges faced by managers in these collaboration initiatives, and solutions that may aid in overcoming those challenges. Executive Summary The report outlines the prevailing trends of offshore outsourcing in a global perspective. The purpose of the report is to provide members of the Executive Board Committee, Educational Testing Service with the information essential for considering offshore outsourcing as a strategic decision. It also highlights the risks, challenges, and potential solutions of offshore outsourcing. Despite its widespread diffusion over the years, management of offshore outsourcing projects continues to challenge organizations. Competitive advantages, such as lower cost, technical knowledge, etc., are key factors to search for external solutions. While offshore outsourcing is associated with several important benefits, it also entails number of risk factors. In order to manage outsourcing decision, it is important to have a clear understanding of various risks posed in collaboration initiatives, challenges faced by managers, and solutions that may allow overcoming some...
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