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It Outsourcing by (bpo/ites) Firms

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MEMORANDUM

TO:                Gail Yosh

FROM:                       Mohamed Abdelsayed

DATE:                November 13, 2018

SUBJECT:        IT outsourcing by (BPO/ITES) firms

I recently came across a study with findings that could potentially benefit us in Quanta Communications. The study cited below, provides insights into what drives business process outsourcing/information technology enabled services(BPO/ITES) firms to outsource its information technology (IT) functions. The results are not only interesting but also can help our business consider better ways to save costs and get the best benefits in the future.

Patil, Shrinivas, and Wongsurawat, Winai.  Information technology (IT) outsourcing by business process outsourcing/information technology enabled services (BPO/ITES) firms in India. Journal of Enterprise Information Management; Bradford Vol. 28, Iss. 1, (2015): 60-76

Overview

The author's analysis what makes business process outsourcing/information technology enabled services (BPO/ITES) firms in India go ahead and outsource its own IT functions. They look at what should be taken into consideration before making the decision, and they explore three drivers – cost, strategy and risk and what is the pros and cons for each drive and what the firms do to overcome the disadvantages. The authors also explain that deciding to outsource purely on cost is very risky and can lead to loss of business because of the degradation of services or responsibilities due to IT outsourcing.

Key Questions

The authors sought to explore the roles various drivers such as cost, strategy and risk play when business process outsourcing/information technology enabled services (BPO/ITES) firms in India outsource their information technology (IT) functions to third-party vendors.

Data Collection

The author used two types of research methodology to collect data quantitative and qualitative. The quantitate were collected through a questionnaire form many participants from a variety of different firms. The qualitative data was collected through personal interviews with the use of open-ended quotations, only two firms FSL and ABPO agreed to participate in the case study interviews.

Statistical Techniques

The author used the Likert scale which is a universal scale used when surveying employs.

Central tendency:          Mean

Variability:                      Standard deviation

Associations:                  Pearson’s r

Other statistics:             ANOVA, t-test, regression

Results

The authors found that in FSL case there were two options for outsourcing, complete outsourcing, and quasi-outsourcing, so they choose quasi-outsourcing because they wanted to have control over the assets. To avoid vender opportunism and to have competitiveness FSL prefer to hire multiple vendors at their various sites. That showed that even though FSL started its outsourcing process with cost as its primary goal, they observed that strategy and risk also play a vital role in the decision-making process. Unlike FSL, ABPO opted to completely outsource its IT, by to consolidating all their IT teams. This consolidation led to the formation of an independent group company called ATech, which provided IT services as a third-party vendor to ABPO and other firms. The total outsourcing their IT functions to ATech not only gave huge cost benefits but also decreased their management functions. The risks that usually came with complete outsourcing were mostly mitigated, as ATech belongs to the same group company as ABPO.

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