Outsourcing of Telecommunication
As we are continuously making greater and greater progress in information technology and telecommunication infrastructure, more and more do not have to maintain an in-house IT department and decide to outsource it to outside vendors. There are many benefits that IT outsourcing may bring to outsourcers, but a lot of concerns and challenges are also introduced. Even though, my paper examines whether IT and telecommunication outsourcing does work or not, and discusses the challenges and issues for today’s managers.
I contend that IT and telecommunication outsourcing is positive to companies and defend my position. Outsourcing of Telecommunications ; Internet Technologies: Does It Work? Introduction What is “outsourcing”? Outsourcing means that paying another company to provide services which a company might otherwise have employed its own staff to perform. (HyperDictionary. com, 2003). In 1990s, “outsourcing” has become one of the burning issues in business administration field. Many companies strategically use outside resources to perform tasks that would traditionally have been done in-house.
Those tasks may include all types of business activities of one company, e. g. manufacturing, recruiting, customer service, and so forth, except its core competencies. People call this “Business Process Outsourcing” (BPO). Generally speaking, reasons for a company to outsource can be: 1. Cost reduction. Through outsourcing, companies are able to reduce costs in many ways. First, decreased corporate headcount enables employers save money in employees’ benefits, insurance, pension, and so forth. Also, a more flatten organization is able to reduce its administrative cost.
2. Focus on core business. Companies do not have to spend too time, money, or human resources on low-relevant activities to its core business. They are able to redirect those resources to more strategic activities which bring higher ROI. In short, the fewer miscellaneous tasks a company handles, the more focus it will be on its core business. 3. Access to expertise. By the very nature of their specialization, outsourcing providers bring extensive world-class resources to meet their customers’ needs.
Since outsourcing providers also focus on their core business, companies that outsource low-relevant activities to them can access their expertise on those activities and then get better quality from their professional services than that from self-owned department. 4. Sharing of risks Companies have tremendous risks associated with those investments in information technology since they are not experts. When companies outsource, they become more flexible with IT and are able to change themselves to meet changing opportunities. 5. Business process reengineering
Outsourcing is able to bring benefits resulted from business process reengineering. By outsourcing, the associated business processes must be redesigned to meet new objectives of the organization. Benefits are therefore produced. Overview of Telecommunications ; IT Outsourcing According to a research report from IDC, worldwide spending on information technology (IT) outsourcing services reached more than $68 billion in 2002 and is expected to surpass $99 billion by 2007. Corporate and government spending on IT outsourcing services in the U. S.
reached $30 billion in 2002 and is expected to surpass $43 billion by 2007. (IDC, 2000) While there are two ways to outsourcing-onshore and offshore outsourcing, at present the most noticeable one is offshore outsourcing. Here is the statistics that shows the annual wage levels of five IT outsourcing exporting nations. From the viewpoint of personnel expense, it is not hard to realize why the total dollar spending on IT outsourcing increases every year lately since the cost savings on personnel expenses are able to make up for insufficiencies in other ways.
For example, India is the biggest market in the global outsourcing economy right now. First, their huge IT talent pool gives them a big advantage over other nations. Although they don’t have nationwide telecommunication infrastructure, India government plays a critical role in developing and enhancing the telecommunication and technological infrastructure in major IT cities. Also, government support is very strong with tax advantages for IT exporters.
Secondly, as a former British colony, India has an English-educated system in their schools as well as relatively lower average salary base compared with the U. S. In addition, their cultural compatibility and friendly attitude toward western countries also play a essential role to attract outsourcing contracts to earn India the first position as the biggest IT exporting country in the world. Surprisingly, Indian IT quality is very high, not as low as its price. This is considered as one of the biggest reasons of their success in the global outsourcing economy. They have the highest number of Capability Maturity Standard certified companies in the world, including North America.