Information Technologies and E-Commerce Outsourcing

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Table of Contents

Introduction
Outsourcing Explanation
Reasons Why Organisations Outsource
Crucial Issues in Outsourcing
Discussion
Conclusion
Reference List

Introduction

In the era of globalisation, many individuals and countries from different parts of the world become closer. As almost every developed state tries to maintain its wealth and share it with other people who have particular needs, a plethora of transnational companies now communicates and expand all over the planet. The industry of informational technologies and e-commerce is not an exception to the ongoing situation described above. Separate organisations aim at the achievement of their own goals that become possible with the help of such a strategy as outsourcing. This method is considered to be beneficial for both sides of an agreement. Moreover, it has its advantages over regular employing practises as it gives more opportunities to workers, regardless of their physical dislocations. The following paper is intended to critically discuss the main reasons why various organisations outsource IT and e-commerce tasks and what are the crucial issues in managing relationships created with the help of such practises.

Outsourcing Explanation

To begin with, it would be proper to explain what does the term of outsourcing imply. Outsourcing is an efficient way of collaboration between two companies, which requires one of them to be responsible for particular duties of another corporation in accordance with a corresponding agreement. Usually, businesses use this strategy to reduce the amount of particular work that burdens their employees (Acora 2012). Although this might seem like a regular service, it requires both sides to sign at least a one-year collaboration contract. It would be proper to mention that many organisations use foreign resources to establish such professional relationships as this method is even more beneficial for them. By giving some work to firms from other states, an organisation from a developed country saves much more finances, whereas citizens of some Third World Countries receive an opportunity to have decent incomes.

Reasons Why Organisations Outsource

The following list will enumerate several statements and factors that influence some companies’ decisions to use the model of outsourcing allocation of duties:

Expenses reduction. As it is mentioned above, it is much cheaper to give certain tasks to people who specialise in a specific sphere. Usually, professionals do not require as much time as beginners to accomplish the same task (Ali et al. 2014, p. 3). Therefore, the quality and speed of their work will be beneficial for both organisations who signed a collaboration agreement. It would be proper to mention that approximately 65% of companies that used the described strategy are satisfied with the achieved results, whereas only 35% of customers did not like particular outcomes.
Accessing skills. Sometimes, even the most developed corporations need employees with certain skills that other workers do not have. Therefore, they establish partnerships with some IT or e-commerce firms that might gladly help the customer organisation to accomplish its one or more projects. When there is a lack of resources, it is a wise decision to use a side workforce, instead of creating new departments and employing graduates as this strategy requires much more investments.
Responsiveness. Once a small firm receives a certain amount of work from its partner, it has to maintain high responsiveness. Otherwise, some instructions or directions required by the second side of the agreement might be disregarded. Therefore, such organisations discuss all the points of every order accurately to satisfy their partners.
Improved service delivery. The strategy of outsourcing gives large IT companies a possibility to use the latest and the newest technologies available on the market without investing additional finances. Usually, firms, which specialise in completing tasks given to them by IT developers or other professionals, already have all the necessary equipment to accomplish assignments of any difficulty (Camilleri 2017, p. 34). Therefore, there is no need to buy or update all the hardware due to technological progress.
Consideration of the most important issues. As all the side and secondary work is outsourced, employees of developer organisations are likely to perform other activities aimed at elaboration on their releases. When people delegate their responsibilities to auxiliaries, they are likely to concentrate on the general presentation of their products, instead of focusing on separate and less significant details.
Solvency improvements. It would be proper to state that various accounting processes become much clearer and predictable when a certain amount of work is outsourced. As employees of secondary firms require regular and set payments, there is no need to recalculate their shares every week. In turn, local workers might have different bonuses or penalties that must be considered in every report. Moreover, demands for financial investments for IT functions become easier to analyse and predict.
Gaining more profits. According to the strategy called economies of scale, it is possible to lower particular costs required to maintain companies’ production processes. In turn, such a method implies releases of more products due to the efficient use of resources. As there are more goods to sell, profits are likely to increase as well.
Preventing over-servicing. Some workers accomplish more tasks than it is required by their projects to demonstrate their competence and professionalism (Cezar, Cavusoglu, & Raghunathan 2013, p. 640). This issue might be eliminated with the help of outsourcing activities as employees of other firms are responsible only for the tasks given to them according to the signed contract at the beginning of the collaboration.
Increased control over requirements, instructions, and the overall quality of work. As it is mentioned above, all the activities performed by hired employees are much easier to control due to such factors as the absence of insider relationships among colleagues, transparency of costs, service level agreement, and other important issues.

Outsourcing Disadvantages

There is a wide range of benefits that IT and e-commerce companies enjoy because of their decisions to outsource particular tasks and professional responsibilities. Nevertheless, potential challenges must also be considered when implementing such a strategy to evaluate all the possible outcomes and its necessity. To begin with, it would be proper to mention that sometimes there is no essential need to outsource. In particular cases, it is a wiser decision to pay extra bonuses to employees whom managers trust and work with for an extended period. However, the following list is intended to enumerate several difficulties that might be caused by outsourcing:

Confidentiality. Intellectual property is one of the most valuable tools in any business (especially in the sphere of information technologies and electronic commerce). There is always a risk to face fraudulence when dealing with unknown or young organisations (Chaffey & Smith 2012). Usually, outsourced products or materials are not patented by their original owners as they remain at their development stage. Therefore, employees might steal the ideas they are working on or patent them as the final product is not released. To avoid such misunderstandings, it is necessary to delegate job duties only among reliable outsourcing companies. Otherwise, there is a high risk to lose all the rights to own the products discussed above.
A possibility of losing reputation among customers. It appears that clients prefer to receive programmes or other software developed by a single team of professionals. Unfortunately, there were many cases when some vulnerabilities were detected in outsourced IT releases. All people who somehow contribute to the creative process of one object must communicate on a regular basis to solve minor issues that might potentially make their customers unsatisfied.
Changes in business operation models and their management. Indeed, every change in any business process requires extra attention to register all the updates. Therefore, outsourcing implies the reorganisation of the entire working process of any company.

Foreign Outsourcing

After identifying the most important reasons why IT and e-commerce companies implement outsourcing strategies on a regular basis, it would be proper to discuss the points outlined in the previous part of the paper in details. The first major benefit of delegating certain responsibilities to independent workers implies reducing organisational, labour, and resources expenses. As it is mentioned above, foreign outsourcing gains more popularity among modern companies. IT organisations benefit from such a method of collaboration even more than other industries because their products are usually sent via the Internet or other internal networks. In turn, such corporations as Microsoft and Apple are obliged to send required materials to China to ensure high-quality final products to their customers (Ernst & Young 2009). The spheres of informational technologies and e-commerce work on virtual programmes and applications that do not need to be shipped all over the world to deliver them to clients.

Foreign outsourcing is beneficial for both sides of outsourcing contracts as this strategy lets people from developing countries earn more money than average citizens in their states. In turn, people who order IT projects have to pay less due to the high dollar exchange rates in other Commonwealths. India remains one of the most popular countries regarding cheap labour. It is a well-known fact that the native inhabitants of India do not earn many finances at regular jobs. In turn, the world’s IT, new technologies, and e-commerce leaders hire local workers as they have a better education than other candidates, whereas their labour is sometimes twice as cheaper than that of Americans, Britons, French, or Germans. There are separate housing blocks in the Asian country built for It specialists to create more comfortable working conditions for them.

The second place in this chart belongs to China. It is necessary to state that not only its citizens work on foreign IT projects, they manufacture and produce the majority of products sold on the international market. Almost every large firm outsources its tasks to Chinese factories and assembly lines. In turn, Mexican companies are one of the most preferable partners for American colleagues. Due to the short distance, it is possible to deliver the required materials to workers without any limitations. However, all other aspects are almost the same among the three states discussed in this section.

Due to the tendencies described above, many developing and even Third World countries strive to establish many outsourcing services for the citizens of economically strong states. It was stressed that Indians have a better education than some IT workers from The United Kingdom, The United States of America, and the United Arab Emirates (Infosys 2015, p. 3). Despite the fact that all these countries have better Universities and other specialised educational institutions, fewer students commit themselves to the profession of IT developers than their peers in India, China, and Mexico. It appears that the citizens of these Commonwealths strive to study to be employed by large companies in the future. The factor of job satisfaction is defined by salaries in the Third World countries.

Another important factor that companies must consider when outsourcing is the aimed market. Nowadays, there are almost no limits and borders among people from different parts of the world due to the diffusion of the Internet and access to it. Therefore, organisations that specialise in the development of software or other IT products have an opportunity to examine their primary customers. As the situation becomes clear on the markets of various countries, it is more beneficial to hire local professionals to complete some tasks for the transnational IT and e-commerce firms because these workers know their cultural demands and adjust final products appropriately. As a result, more clients’ needs are met and satisfied, which positively influences the product’s demand in a certain territory.

Time Management

Recently, various European and American IT firms started to delegate their responsibilities to their colleagues from other firms that accept such orders because it reduces the valuable time required for elaborating on more important issues than doing the technical part of any software. Sometimes, the work that IT specialists are obliged to cope with does not demand more than trained enough skills to write code. However, there is another side of the coin that needs a unique and creative approach. For instance, when various computer programmes or smartphone applications are developed, their interface presents one of the most important elements assessed by users (Krug 2013, p. 69). Therefore, it is more beneficial for employees to concentrate their attention on this part of the job, whereas other responsibilities can be outsourced.

There is one more essential reason for outsourcing that sometimes cannot be claimed efficient. This method is known as remote call centres. It would be proper to stress that some corporations support their clients 24/7, which requires them to hire people from other time zones. As these services must operate without hours or days off, IT companies outsource these duties to people who are able to work fixed hours in accordance with their location’s time. Sometimes, clients who use various products of IT companies have particular difficulties with using them. To overcome these issues, they call for technical support of the company that delivers its programmes to them. However, this strategy does not have much in common with regular outsourcing as its measures are compelled.

As it was discussed in the first part of the paper, there is no need for delegating corporations to purchase various equipment for their employees to perform tasks appropriately if they can be assigned to the workers of independent services. As stated by Buss and Peukert, “Previously an unsung hero, outsourcing has matured as approaches have evolved beyond the dash for savings, and ever-more CIOs recognise the value of early and on-going investment in a relationship” (p. 980). Therefore, some businesses use the model of SaaS (Software as a Service).

Crucial Issues in Outsourcing

Although several disadvantages were already discussed above, this section is intended to extend this topic and explain what crucial issues are prevalent in the sphere of IT and e-commerce outsourcing. Unfortunately, this model of collaboration is at its development stage at the moment. Therefore, even the most professional organisations do not outsource all the labour they need to accomplish. It would be proper to mention that working with unknown employees might adversely impact the outcomes of such work. It is necessary to stress that when companies experience problems of this severity in their working processes, they are unlikely to use the outsourcing method again.

Different Perceptions of Work Conceptions

Speaking about the collaboration with foreign firm or freelancers, the issue of different views on the conception of completed projects might differ among customers and their remote employees. It is necessary to have a mutual understanding of the entire work’s conception for people who get involved in it. There are two reasons that might lead to various misunderstanding between colleagues. The first problem is the lack of explanation of specific requirements or general information about a certain project. To develop any product properly, IT specialists must know its final function, purpose, and sphere of implementation (Lihong 2012, p. 5). Another problem is almost always disregarded by companies that outsource services for the first time. This issue implies various views on the same work by people of different cultural backgrounds. It appears that citizens of such countries as the United States of America, India, China, and Mexico have significant differences in their cultures and national customs. This factor might adversely impact various collaborations among professionals from these and many other states due to their varying perceptions of their primary responsibilities, and presentations of the final products they must submit.

Because of common complaints and customers’ work results dissatisfactions, flagman outsourcing corporations from the Asian countries mentioned above, Eastern Europe, and the Philippines did not leave the problem of inappropriate work perception unaddressed. To avoid multiple misunderstanding in the future, IT developers must undergo professional courses in English and meet all the customers’ requests. Once both sides arrive at a consensus, an order is being processed accordingly. Nevertheless, due to the fact that there are multiple outsourcing companies all over the world, it is impossible for them to meet the requirements mentioned above. The market is overwhelmed with new and young businesses. Unfortunately, these players are not responsible for the work they provide to their customers. In fact, these organisations usually do not have enough financial means to provide educational courses to their employees (Moon et al. 2016, p. 156). It is necessary to remember that multiple mistakes within every project influence reputation of the entire company. Hence, citizens of the United States of America, the United Kingdom, and the United Arab Emirates are likely to establish collaborations with already professional services, whereas young companies usually go out of business because of their inability to compete appropriately.

Violations of Non-Disclosure Regulations

Sometimes, such popular companies as Apple, Microsoft, Sony, and other software developers face unfortunate outcomes of outsourcing and collaborating with foreign colleagues. Despite the fact that every hired employee must sign a non-disclosure document about his or her job before working on particular orders, there were many cases when transnational corporations had information leaks. For instance, such aspects of IT products as their external design and innovative functions can be found on the Internet before their official releases. Usually, it happens because foreign workers use the information they operate for their own benefits. It would be proper to mention that there are many pirate organisations that gladly pay these people for sharing confidential information with them. In fact, they guarantee that the reputation of these employees will remain the same because it is impossible to find the leak of the information in a big company.

There is another method of fraudulence in the sphere of IT and e-commerce outsourcing. If a worker neglects his or her rating and level of reliability among foreign customers, one might sell illegal copies of any product developed by this person. Usually, these copies do not differ from original versions of various programmes or software architectures. However, these products’ prices are much lower than the ones available on the market, whereas the quality remains the same. Because of the identical IT products available online for free, some people do not have any need to buy and pay their money for official releases of certain programmes. Such a factor adversely impacts the IT transnational market as a whole because official creators receive less financial support from their clients and other consumers. As a result, they might not have enough money to develop and create new and more efficient products in the future.

As it was mentioned above, there is also a tremendous possibility of intellectual property loss. As stated by Buss and Peukert, “Outsourcing does not only enable the firm to learn about the technology of other firms but also other firms learn about the technology of the focal firm” (p. 979). In fact, when any project is outsourced, its final version does not belong to a customer organisation yet until it patents it. Hence, employees who seek additional income do not hesitate to patent their works and claim that they remain legal owners of various IT products, regardless of multiple job agreements that restrict them from committing such actions.

Lack of Control

It is obvious that remote collaboration has a particular drawback, comparing to that in regular conditions. One of these issues is presented by the fact that managers cannot control how their work instructions are followed or elaborated on by employees of outsourcing companies. Sometimes, this factor is crucial because superiors might point at particular mistakes or other points of dissatisfaction. When there is no ability to control the progress of any project, customers are likely to express their negative impressions due to the development of a program that does not meet their expectations. In fact, remote workers are free to choose various methods to complete their projects faster. In certain instances, such an approach to work might lead to low-quality final submissions. It would be proper to mention that the lack of control can be beneficial sometimes because an employee does not get interrupted by his or her manager on a regular basis, which lets one concentrate on various projects’ accomplishments (NashTech 2014, p. 2). To reduce all the possible risks that might occur because of remote collaboration disadvantages, some corporations are given an ability to control their workers by obligating them to fill daily reports and submit separate completed parts of every project.

Poor Comprehension

Although the problem of poor comprehension is a consequence of the point discussed in the first crucial issues paragraph, it has to be explained separately because of its high importance. When beginners work on various outsourced IT projects from large corporations, they might not meet certain requirements expected by their customers due to their poor comprehension or interpretation of initial instructions. Unfortunately, the role of cultural barriers plays a significant role in this problem. When the tasks are complex, employees might not perceive them appropriately due to the lack of knowledge regarding foreign language. Sometimes, misunderstandings occur on the soil of misunderstandings between clients and professional workers who might complete a not requested work by mistake. At the beginning of their careers, it would be proper for people who work on outsourced projects to consult native speakers and ask them to guide the employees in case of wrong interpretations. Such an approach to this question might prevent a tremendous waste of time and other resources.

Discussion

Although the method of outsourcing has many issues at the present moment, they will be eliminated later because this industry develops rapidly. In the modern world, people create satisfactory services if someone is ready to pay enough money for that. The present digital era opens new opportunities for IT and e-commerce professionals from developing countries (Nduwimfura & Zheng 2015, p. 29). Perhaps, the entire planet might become “borderless” because of the tremendous changes that happen to transnational communities, people’s cultural values, and so on. Not only outsourcing is an efficient method of collaboration and tasks delegation, but it also is an essential practice for patriots who do not want to leave their motherlands to develop in other states and work for large companies that prefer to hire foreign employees because of high-income taxes and salaries in their Commonwealths.

It would be proper to mention that the discussed collaboration method is a beneficial strategy for any company, regardless of its primary activities, specialisation, number of clients, and many other factors. Moreover, even beginner organisations can successfully hire a colleague online with the help of multiple specific web resources for freelancers. It appears that professional workers from such countries as India, Poland, Bulgaria, Russia, and others are encouraged to work for foreign corporations because local firms do not provide enough financial means for people to live without essential needs (such as good food, clothes, housing, means of transport, and so on).

As it is mentioned above, outsourcing does not always imply collaboration with people from abroad. For instance, there are many centres in the United States of America, the United Kingdom, and the United Arab Emirates that provide the same outsourcing services. Indeed, it is much easier to hire workers from these organisations because they are obliged to follow local laws that prevent them from allowing some of the crucial issues discussed above to happen. However, the majority of companies seek more methods to save their money that can be spent on the development of new technologies that can be integrated into their products in the future.

Nowadays, there is a wide range of delegation options available on the international market. The main topic of this paper is IT outsourcing that remains one of the most popular spheres in such practises as it has been developing for an extended period. Unfortunately, people from different parts of the world were limited in their actions until the 1990s (Sayre et al. 2012, p. 4). Earlier, computers did not have enough power and functions to work with professional programmes and maintain global communication. As the sphere of computer hardware and software develops, freelancers or employees of outsourcing companies can now receive certain tasks from their foreign clients without any limitations.

It is necessary to mention that information technology outsourcing does not always imply working on various processes related to the given industry. In the majority of instances, hired workers are required to complete complex tasks to elaborate on the entire infrastructure of their IT customers. The most popular corporations that use the services of foreign professionals are IBM, HP, and Microsoft. Sometimes, these companies request their workers from abroad to accomplish their internal tasks that require purchasing or renting their program products, applications, other technical means and infrastructure fragments. The easiest outsourcing practice implies the usage of the customer company’s online hosting. Nowadays, such a method of international collaboration has become one of the most popular services in the transnational IT market. It would be proper to stress that outsourcing might be presented as a campaign organised by a particular corporation that provides a wide range of services for any of its clients. Moreover, sometimes these organisations may accept various orders that they do not offer on a regular basis (Thinbodeau 2016, p. 3). Managers find new employees that have narrow IT specialisations to satisfy their customers with high-quality work. However, such situations are minor. Indeed, clients prefer to focus only on a separate service, instead of having one organisation developing all the necessary products. In fact, large corporations hire workers from different outsourcing services.

Despite the various responsibilities of IT developers and other employees involved in this sphere, the most popular outsourcing method is the maintenance of computers. Such a strategy allows customers to acquire a full range of services that do not require them to hire system administrators. The maintenance of computers includes the following responsibilities:

Setting and updating hardware
Setting and updating software (Thinbodeau 2016)
Creating reliable security tools to prevent other users from illegal interventions into a certain network
Antivirus prophylaxis
Efficient hardware replacement
Preventing hardware from breaking and wearing out
Copying and saving all the necessary information
Multiple consultations and personnel education.

It would be proper to mention that many outsourcing firms earn most of their monthly profits by providing the following services:

Maintenance of various technical machines or parts
Computer modernization
Local networks provision
IP-telephony and telephone exchange setting
IT-audit and consulting.

Another important model of IT outsourcing is SaaS (Software as a Service). Unlike regular hosting workers, employees who follow the discussed scheme must install all the necessary equipment for the placement of informational systems and maintain all this apparatus’s constant work, and update it when necessary. It would be proper to state that the clients are required to cover hardware rental services of outsourcing companies (Thinbodeau 2016). Therefore, customers must not spend many corporate financial means to purchase all the necessary equipment that is required by many IT companies. The given methodology does not obligate people to buy licensed programmes, monthly payments for which might also become significant.

Conclusion

Outsourcing is one of the most common employing techniques in the sphere of IT and e-commerce today. Many companies prefer to hire workers from abroad as they receive fewer payments and perform their tasks more professionally than local specialists. As in every other sphere, outsourcing has its advantages and significant disadvantages. As it is mentioned above, the first beneficial part of such collaboration implies less corporate labour expenses than traditional methods. Also, this gives global organisations the ability to work with skilled professionals from other countries who might have better educational backgrounds and richer experiences than their colleagues from other parts of the world.

Moreover, clients are satisfied with the improved level of outsourcing companies’ responsiveness. However, there is another side of the coin because some people do not support and establish the given relationships policy with foreign firms. Such concerns occur due to the fact that corrupted employees might steal valuable intellectual property and sell it to pirates to gain extra profit. Moreover, some managers are dissatisfied with the fact that they are not able to control the work of people who receive money from them. It would be proper to mention that freelancers who work for outsourcing organisations often neglect certain parameters of their responsibilities. In general, IT outsourcing is a great opportunity for professionals from developing countries and transnational corporations. However, some aspects of this collaboration model have to be improved to avoid common misunderstandings.

Reference List

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Nduwimfura, P & Zheng, J 2015, ‘A review of risk management for information systems outsourcing’, International Journal of Business, Humanities and Technology, vol. 5, no. 4, pp. 28-33.

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