Cmgt 442 - Outsourcing Risks

Outsourcing Risks

CMGT442

June 30, 2012

Introduction

Outsourcing is defined as "Paying another company to provide services which a company might otherwise have employed its own staff to perform" (Outsoucing). To most people this means the loss of American jobs to India. What people do not realize is that this just means someone other than an employee performing a certain task and not just going to another country. The majority of businesses do this without comprehending that they are outsourcing. These activities include data storage, processing information systems applications, desktop support, and network support. The main reason for doing so is cost, but also when a business recognizes that they cannot do these activities themselves. All outsourcing will have risks involved and the only way to mitigate this is research.

Data Storage

Going to an outside company for data storage is a great way for businesses to exploit technology without having to deal with the hardware and software investment. With so many service providers that specialize in data storage and backups, choosing the right one will come down to how concerned the business is with how their data is being handled. Primarily should be concerned with the three areas of confidentiality, integrity, and availability. Confidential in that the data is not sold or used for anything else. No one else should be able to see the data. The data keeps its integrity. The company ensures that the data is not mixed with another company's data that the service provider is supporting. If the service provider hosts multiple companies' data on the same server, then do they segregate the data across different blades and/or is it isolated from the use of virtualization software. Also, how often data is lost and what they do when the data compromised. Lastly, how available is the data? The data should be able to be accessed any time the business needs to and depending on the business, the speed at which it is accessed. Along with availability is back-up and recovery. If any happens to the servers, how quickly does the provider have that data back? The locations and policies should be reviewed to ensure the compatibility with the business' activities and physical security awareness.

IS Applications

When someone starts a business they are not thinking about departments or applications like payroll and human relations. Nor do they want to have to hire extra employees. For many small businesses non-core related jobs like these do not require a full position or in some cases a part time position, but only need to be done as an occasionally. Hence, it makes business sense to outsource these departments and/or applications. The main disadvantage to outsourcing these services is the risk of placing part of the business in someone else's hands. Researching the trustworthiness, if they will stay in business, or can adapt to the company's growing and changing need determines which one to choose. Since these types of services have been offered as outsourced services for years, there are laws and regulations governing companies that offer them. In most cases, these service providers are bonded and insured.

Desktop Operations

With the cost of computers,