Category: Outsourcing

Background

The information technology (IT) industry is a non-dispensable part of modern society, with information and communications technologies being integral parts of many businesses globally. The core product in information and communication technology is software. Its production has therefore become a crucial industry concern. Having been a closely guarded internal matter in the earlier stages of industry growth –where companies dedicated whole departments for the purpose- some companies deviated from this practice and instead sourced their software to companies that specialized in its production. (This was known as in-house software development). Organizations in the industry also exercised the option of contracting outsiders to develop their software (Huckvale et al, 2003, pp. 23).

The main reason these companies opted for another avenue away from in-house development was staffing. The early stages of the computing industry leading to the late 1980s saw companies that had their software development departments undergo a phenomenal rise in the developer staff. This is because the software industry was immature with the products being inflexible for usage in the heterogeneous mainframes framework. Therefore, each company had to develop software for its own mainframes. In this regard, they had to increase their developing staff. The growth in the level of software used as the 1990s approached coupled with the increased complexity of software led to a further increase in the software teams. The resulting hike in payroll budgets and infrastructure costs became too expensive for individual companies whose core activity was not software development (Ishenko 2005, pp. 56).

By 1994, companies were increasingly contracting software development and other IT tasks in a bid to save on expenditure and management effort. Software outsourcing came to be defined as ‘the contracting out of the development, planning, management, training, maintenance, or operation of software services, skills, products or applications’. Outsourcing took the place of in-house development and became a fast-growth industry (Sahay et al 2003, pp. 67).

The industry comprised in-country and offshore outsourcing. The latter sect sector was involved contracting companies to carry out the software development. Many companies especially with the growth of globalization picked up the trend. Globalization had increased competition in the computing industry with other effects being: lower costs, faster market delivery, highly qualified personnel, increased quality service quality, and customer proximity. Some aspects of the software development function made it suitable for offshore outsourcing: the ability for the job to be done from a distance; the jobs’ heavy information load; high inter-country wage difference; and the repetitive nature.

Near-shore outsourcing is a version of offshore outsourcing whereby the countries targeted are culturally and geographically close to the outsourcer’s mother country. The fact that software development companies are able to supplement their income with outsourcing contracts greatly pushes the practice. The client companies are also able to free up their resources for the core operations. Another factor that has boosted the growth of offshore software development is the opportunity for the developers to cash in on their varied expertise and solutions from potential clients (Jones 1994, pp. 2-34).

The software development process is transferred into the hands of professionals thereby avoiding procedural and administrative mistakes that are prevalent in the process. This also contributes to the reduction of development time while the providers are able to develop their efficiencies through routine tasking. Offshoring is also in line with the increasingly practiced concept of business process outsourcing whereby non-core operations are contracted allowing for focus on primary business activity.

Finally, offshore outsourcing of software development allows for access to world-class capabilities even by small businesses (Nicholson 2004, pp. 17).

Ethical issues in outsourcing of international software development

One of the major ethical issues in the offshore outsourcing of software development is the ensuing conflict of cultures. This is worsened by the lack of face-to-face contact, which complicates the understanding and efficient management of the opposing cultures. The inherent difficulty is due to the reason that culture constitutes many aspects like; language, tradition, values, and beliefs (Borchers 2003, pp. 32).

As an ethical problem, the mismanagement of cultural differences occurs when the outsourcing clients are not privy to the developers’ cultural behavior and beliefs. They only focus on getting their work done, yet there exist cultural differences that are pertinent to management. Gerard Hendrick Hofstede, a Dutch organizational sociologist, profiled these cultural differences in five dimensions. One of these dimensions, the power-distance aspect describes the extent to which the less powerful members of the organization deal with biased distribution of power. Some cultures for instance; Australian, Austrian, Danish, Irish, New Zealand; are more receptive to consultative and democratic power structures, that is a small power distance. In other scenarios for instance Malaysia, it is accepted that subordinates observe the hierarchical structure of power (Gislen et al 2009, pp. 12).

Another dimension; known as ‘individualism vs. collectivism’; describes the cultural issue of the extent to which people perceive themselves apart from their group affiliations. The two opposing cultures are individualist and collectivist, the former being whereby a person is expected to hone and show their own personality and affiliations. This is as opposed to the latter whereby individuals are defined as members of a longstanding group for instance religion or profession.

‘Masculinity vs. femininity’ as a cultural variable simply describes the value attached to male and female values. The masculine cultures value competitiveness, ambition, and wealth. In the feminine cultures, however, relationships and life receive more priority as values. In yet another dimension the way people deal with uncertainty is perceived to be a substantial cultural variable. There are cultures with strong uncertainty avoidance where people prefer to work with clear and strict rules and participate in the informally structured activity. They are also characterized by low employee turnover. The flipside is cultured with weak uncertainty avoidance where people work with implicit instructions, flexible guidelines, and informal activity (Mcsweeney 2002, pp. 24)

The final dimension looks at the ‘time horizon’, that is the relevance attached to the future relative to the present and the past. In long-term-oriented cultures, future implications are of more importance, and persistence is esteemed. In short-term cultures, however, people focus more on issues that deal with the past present, preferring immediate stability, respect for tradition, and reciprocation of gestures (Hofstede, 1980, pp. 1-6).

Outsourcing client management may know about other cultural environments, yet they may go to great lengths to avoid dealing with them. This may lead to a range of undesirable situations affecting both the customer and the developer. In the case of outsourced software development, some issues have been isolated as particularly prevalent (Krishna et al 2004, pp. 22).

The yes syndrome is a cultural issue whereby the staff says ‘yes’, instead of ‘not sure’ or ’no’. This is particularly rampant in Asian cultures where they affirm to queries on the delivery sate without absolute certainty since they are more hesitant to proffer negative answers as compared to Europeans and Americans (Bellah & Burns, 2009 pp. 1-22).

Management style also becomes an issue whereby western managers do not make continuous follow-up checks considering it to represent a lack of trust. On the other hand, in other cultures lack of persistent demand for progress reports implies that the task is unimportant.

It is also apparent that the western management style focuses more on the outcome rather than behavior as opposed to an emphasis on behavioral control in other cultures, for instance, India, a major outsourcing hub. The risk-taking tendencies of people indicate that while westerners take more risks and make reasonable assumptions in a bid to complete projects on time; other cultures have to clarify everything before proceeding with a task. They deem late delivery as justifiable by unanswered queries raised by the developer.

The issue of conflict and culture also comes into play, whereby the communication of dissatisfaction is taken differently in different cultures. Westerners are found to be more confrontational and assertive as compared to other cultures’ tolerance of conflict. The expression of appreciation also differs greatly with the culture that is affiliated with the west expressing satisfaction for average performance; while others do not offer any positive feedback for work that falls below average. This may create dissatisfaction among some developers (Bellah & Burns 2009, 12).

Lastly, the way people handle their private lives in relation to work life. Keeping the two separate is preferred in some quarters where work time is fully dedicated. In the comparative scenario, workmates and time are considered part of private life with non-work issues occupying work time and space.

Solutions to ethical issues

Developers from other cultures who participate in offshore outsourcing face many ethical challenges, necessitating ways for resolving these issues to prevent conflict and disruption of the projects. The first strategy in achieving this is training, the first component of which would be pre-posting training in language, cultural practices, norms, and values. The second component would be systematic on the job cross-cultural training in a bid to impact ongoing experience while also enabling knowledge sharing among employees. This training should be two-way catering to both the developers and the client. The resulting respect and understanding would enable smooth relationships and completion of tasks (Michael et al, 2002 pp. 13). Encoding people to create personal ethical policies on culture ‘using this method which mentioned by Kallman and Grillo (pushers – mom test – TV test – market test)’ would also assist in creating a cultural understanding in the offshore outsourcing process. Developing easy language and communication frameworks to facilitate understandability and confidence in the developing staff would also assist to a large extent (Siakas 2002, pp. 5).

The staffing decisions in choice and incentives offered to management and developers have a role to play in dissolving ethically charged cultural divide issues. In the efforts of induction of staff on other cultures, it should be recognized that culture foreigners cannot achieve the cultural fluency of the indigenous people. The use of cultural bridging staff would therefore become necessary by forming teams with people rooted in both cultures. In an effort to avoid ethnic tensions, the outsourcing projects that have has racial bias should be avoided as a matter of great priority to the outsourcer. Meeting the suppliers in person would also provide leverage in defeating these cultural hurdles, with associations beyond the professional arena being encouraged. This facilitates discussion of cultural issues thereby fostering empathy and understanding.

An umbrella organization should also be initiated; overseeing relationships between software companies and suppliers, focusing on ethical matters. This organization would be responsible for creating global ethical policies guidelines with policy recommendations from cultures all over the world (Bhat, Gupta & Murthy, 2006, pp. 38-44).

The establishment of a global organization to monitor and control international software development that involves offshore outsourcing should be considered. This organization’s mandate and input would depend on two main sources. Firstly, direct monitoring of outsourcing companies’ activity. Secondly, feedback would be sourced from both suppliers and outsourcers in determining whether any ethical violations were encountered.

Conclusion

International software development outsourcing is a high-growth sector, especially in the off-shoring sector. As companies clamor for this option in a bid to make strategic savings that maximize cost advantage, ethical issues may lose their significance. Instead, companies are bound to be more focused on chasing the bottom line to the detriment of ethical concerns. Of particular interest are cultural implications of the practice, since it is virtually geopolitically unrestricted. There would emerge hostilities from mismanagement of cultural differences that would not only affect the companies’ operations but also strain international relations. The recommended analyses of situations and solutions posed thereof should therefore be attended to and applied.

There are recommended ways of approaching problems and challenges in cross-border software outsourcing structures. Apart from the strategic choice of projects, relationships management and staffing best practices have been recommended. This is based on the increasing realization that globalization does not imply homogeneity of culture but necessitates tackling cross-cultural issues arising. This will result in more effective business operations in offshore outsourcing of software development and increased cross-cultural understanding in the contemporary world.

Reference List

Bellah, J. & Burns, J. R., 2009, Examining Solutions to Challenges in Offshore Software Development: The Perspective of a SME with a Captive Development Office in India. Texas. Rawls College of Business Administration.

Bhat, J. M., Gupta, M., & Murthy, S. N., 2006. Overcoming Requirements Engineering Challenges: Lessons from Offshore Outsourcing. IEEE Software, Vol. 23, No. 5, pp. 38-44.

Borchers, G., 2003. The Software Engineering Impacts of Cultural Factors on Multi-cultural Software Development Teams. In Proceedings of the 25th international Conference on Software Engineering (Portland, Oregon). International Conference on Software Engineering. IEEE Computer Society, Washington, DC, 540-545.

Gislen, M. & Venugopal, V., 2009, Managing the Cultural Challenges for Successful SoftwareOutsourcing. Tambaram Chennai 600 045, India. Gislen Software Pvt. Ltd.

Hofstede, G., 1980, Culture’s Consequences: International Differences in Work-Related Values. Beverly Hills, CA: Sage Publications. Print.

Huckvale, T. & Ould, M., 2003, Process Modeling: Who, What and How. In Grover, V. & Kettenger, W.J. (Eds), “Business Process Change, Reengineering Concepts, Methods, and Technologies”. Hershey, PA: Idea Group Publishing.

Ishenko, O., 2005, Outsourcing of Software Development. Humbold Universität zu Berlin.

Jones, C. 1994. “Build, buy or outsource? Computer”, Volume 27, Issue 12. pp 77–78.

Krishna, S., Sahay, S., & Walsham, G., 2004. Managing cross-cultural issues in global software outsourcing. Communications of the ACM. Vol. 47, No. 4, pp. 62-66.

McSweeney, B., 2002. Hofstede’s Model of National Cultural Differences and their Consequences: A Triumph of faith – a failure of analysis. Human Relations, January, Vol. 55, No. 1, pp. 89-118.

Michael D. M. & Felix, B. T., 2002. Beyond Models of National Culture in Information System Research. Journal of Global Information Management, pp. 24-32

Nicholson, B., 2004. Embedded Knowledge and Offshore Software Development. Information and Organization, Vol. 14, pp. 329-365

Sahay, S., Nicholson, B. & Krishna, S., 2003, Global IT Outsourcing: Software Development Across Borders. Cambridge, Mass: Cambridge University Press.

Siakas, K. V., 2002. SQM-CODE, Software Quality Management – Cultural and Organizational Diversity Evaluation. Ph. D. Thesis. London Metropolitan University, London.

It is indeed true that determined attacks cannot be protected by firewalls. However, a company’s network is supposed to be provided with a definitive filter in the form of a firewall. It is unfortunate that a number of well known commercial firewalls can still be bypassed by hackers.

The vulnerability of companies towards attacks is often increased during the process of outsourcing network security. The latter can be a cumbersome task owing to the high level of risks involved. Although outsourcing network security has several attractive ventures, there are considerable risks.

Managed security services have been offered by several companies for some decades. The confusing nature of the field has made it difficult for industry analysts even to classify the actual nature of services offered. A recent study on SonicWALL, Palo Alto Networks, Juniper, Fortinet, and Cisco firewall companies revealed that all of them are prone to attacks.

A split Handshake spoofing trick that interferes with TCP connections can penetrate through these firewalls. The trick is used by hackers to confuse server machine computers. The devices may not be able to differentiate between internal and external sources of communication.

Cisco and other firewalls cannot be used to enhance password policy. Noncompliance to strict password policy can lead to dire security ramifications. In addition, non-technical risks can hardly be prevented effectively by Cisco. For instance, social engineering is one of the areas that Cisco cannot manage properly. Besides, lax security policies and poor decisions cannot be prevented by the Cisco firewall.

In order to enhance the effective operation of a firewall, employees should not visit vulnerable sites within office networks. Passwords should remain confidential at all times. Office workers should also follow the security guidelines provided by the firewall company. Office users are also supposed to immediately report any signs of malicious attacks or suspicious links to the network security personnel.

Introduction

Organizations in all industries are interested in maintaining their levels of competitiveness for continued delivery of value to their owners (shareholders). In fact, “any organization in today’s fast moving environment that is looking for the pace of change to slow is likely to be sorely disappointed” (Bertscherk and Kaiser 395). One of the major changes that organizations consider in the effort to gain competitive advantage is the adoption of cost-cutting strategies such as outsourcing. This paper addresses the question whether organizations based in the US should focus on creating and protecting jobs at home or facilitating international business even if it means moving some productions abroad.

US-based Organizations’ plan of Outsourcing Production from Asia

Organizations reduce their production costs in the effort to deliver optimal returns on investments to their owners. Outsourcing is among the many available options for accomplishing this mission. The US Bureau of Labor Statistics uses the term outsourcing to describe the “movement of work that was formerly conducted in-house, by employees paid directly by a company, to a different company” (Mucha 28).

The term offshoring refers to the other organization that is referred in this definition in situations where it is located outside the US. Whether outsourcing is done to an organization operating within or outside the US, both situations attract controversies. Mucha confirms that many critics for business outsourcing contend that various jobs that were initially held by the Americans go forever whether (or not) organizations employing them venture in manufacturing outsourcing deals offshore or inshore. Although any loss of jobs will imply more government expenditure in welfare and/or reduced tax revenue, outsourcing has its advantages and disadvantages to the US economy.

With the emerging differences in technological advancements and differences in living standards, the US needs to outsource in a bid to lower its cost of production. The concept of outsourcing can be evaluated in terms of its implication on the US economy from different perspectives. For instance, Kathawala, Zhang, and Shao assert that there is nothing wrong with over depending on outsourcing production for given nation (185).

The authors maintain that organizations should consider cost-cutting strategies such as outsourcing noncore activities in the effort to gain competitive advantage. In the automobile industry, many organizations have had long strategic partnerships with manufacturers of rubber, metal, and even electrical products among other products. For instance, as Kathawala, Zhang, and Shao (190) confirm, “by the end of 1930s, two thirds of Ford’s production came from outside sources”. Through this outsourcing, the organization gained both high productivity levels and cost saving advantages.

The benefits acquired by Ford Company through its engagement in outsourcing implies that the single most important reason for the US to continue depending on outsourced production in Asia is anchored on the economic cost saving principles. Indeed, many US-based corporations that outsource from Asia such as Nike are able to cut on labor costs tremendously since the emerging economies have lower living standards, and hence low wages compared to the US.

Through outsourcing production, US-based organizations also gain from the “delivery of new products to markets more quickly, in cost-effective ways while also staying up to date with technology and latest procedures” (Kathawala, Zhang, and Shao 192). These merits form important assertions in favor of the US to continue depending on outsourcing its production rather than basing its production at home. Indeed, production involves collaboration between different parties, which produce products’ parts either partially or to completion for subsequent assemblage so that all products are produced in a globalized outsourcing manufacturing environment. The US cannot afford failing to benefit from this globalized outsourcing environment.

While developing the capacity to compete with other organizations, operational efficiency is important for any organization. Thus, it is only natural that the US-based corporations “should do their best to obtain useful sources of materials and services from different channels and to build their sustainable comparative advantages using different approaches” (McCormack 213). Outsourcing is one of the ways of enhancing the productivity of an organization. It surfaces as an important comparative advantage for organizations that are established in geographical areas with high living standards, which prompt them to pay their workers higher wages and salaries so that their products become more expensive in the global market place. By outsourcing in Asia, it follows that the US can mitigate this challenge by having access to unique materials that are produced elsewhere across the globe to gain more market opportunities.

While claims on the importance of depending on production outsourcing in Asia for competitive advantage are important, challenges such as a reduction of employment opportunities for the Americans cannot be overlooked. For instance, “the United States has lost approximately 42,400 factories since 2001” (McCormack 214). Many of these factories deal with production, which has since then been shifted to Asia. While the number of Americans working in the production organizations continues to reduce, the number of Asians working in such organizations continues to grow. The dominance of Asian nations in the manufacturing of printed circuit boards (84-percent of the global printed circuit boards) may perhaps well exemplify this scenario (McCormack 217). This observation implies that more jobs are been created in Asia than within the US. The ramification of low employment opportunities is higher with reference to welfare and the reduction in government revenues through taxations.

Following high investments in automation in Japan in 1970s, many of the production operations for American-based organizations were transferred to Japan. Later, cheaper labor was discovered in Mexico, thus prompting the organization to consider outsourcing from there. In 1990s, China became the most preferred nation to outsource production from while India, Vietnam, and other Asian nations were also rapidly picking up as preferred outsourcing destinations. These trends imply that many of the US-based corporations base their production outsourcing decision on labor costs rather than the total costs.

When US-based production organizations evaluate the cost of production that is associated with outsourcing, it may soon become evident that overlying on outsourcing production in Asia subjects the US into economic challenges. A possible counterargument is that production operations that are mainly outsourced in Asia require low-skilled labor besides being tiresome so that Americans are left with more attractive and lucrative jobs. However, it is important to note there are Americans living below poverty levels, as set by different states, thus prompting them to depend on welfare benefits from the government. The low paying jobs, which require low or medium skilled workers, may be attractive to this group of people. Why should they be shifted to Asia while still some Americans need them? In this sense, relying on outsourcing production in Asia is unhealthy for America. It denies some of its residents the opportunities for employment with the repercussions of higher government expenditure on welfare.

Pros and Cons of Production Outsourcing

Advantages

From the perspective of the national economy, all nations do production outsourcing. For instance, “The UK’s economy is already 26.6% outsourced, defined as the ratio of imports to the gross domestic product” (Mucha 29). Although reduced labor costs are important in forming decisions to outsource production, organizations also acquire the advantage of benefiting from specialized expertise in production. Organizations outsource their production to other organizations when they are sure that the vendor has the required specialty in technical expertise together with the appropriate equipment for production of a product to the required quality levels. As such, it becomes easy for an organization to achieve better productivity combined with a consistent supply of its products in the global market.

Middle-line managers in an organization engage in various tasks, including ensuring timely production and that the production processes are running efficiently. This case suggests that noncore activities compete for the core activities performed by such managers. The core activities are important for consistent growth of an organization. Since outsourcing is mainly done for noncore activities, it implies that line managers are freed some duties so that they can concentrate only on the processes that enhance organizational growth. In the process of outsourcing, an organization also transfers part of its risks to another party. As revealed before, vendors to whom production is outsourced are specialists in noncore productions tasks. Therefore, they are able to enhance mitigation of some risks better than an organization seeking production-outsourcing services.

Organizations’ HRM ensures productivity of employees through the reduction of labor turnover. The HRM is also tasked with recruitment, training, and development of employees in the event of low motivation, organizations experience low productivity levels due to costs such as absenteeism and non-optimal job performance. In terms of outsourcing, these tasks are transferred to another party (the vendor). Indeed, “Outsourcing eludes the need to hire individuals in-house…hence recruitment and operational costs can be minimized to a great extent” (Mucha 28). Dealing with fewer employees implies less problematic efforts to enhance their performance to increase the overall productivity of an organization.

Disadvantages

Outsourcing involves trading managerial control with cheaply produced products. Signing a contract for the production of a complete product or some parts of a product implies shifting the power to control the processes of production to other parties that are not residing in-house within a company. Consequently, misalignments of missions may occur. Outsourcing vendors often focus on profit maximization by delivering products in the condition and manner specified in the contract.

Production processes require handling and storage of an immense amount of data. Since this data is required in production, the vendor must have access to it. Unfortunately, the organization seeking production-outsourcing services is exposed to the risk of the likelihood of such data being held without confidentiality. In some instances, outsourcing may create quality problems. The only way that outsourced vendors increase their profits is through a reduction of expenses.

Provided the products produced through outsourcing meet the standards specified in the contract, an organization cannot question or place demand for better quality levels in response to changes made by competitors to its products without making an additional payment. Nevertheless, even where an organization is willing to follow this route, it is limited by the capability and flexibility of the vendors’ production systems. With reference to hidden costs and negative publicity where a vendor produces goods with child labor or exploitation, outsourcing may present significant disadvantages

The Problem with increasing Dependency on Asia for Production

Working conditions in Asia have come under sharp criticism from human rights activists claiming that some products are produced under conditions that are best described as sweatshops. Avoiding sweatshops has positive ramifications to an organization. Employees who are treated poorly produce goods that fail to pass the quality test (Gellar 8). “Desirable employees want to work for companies, which they can share their values, just as consumers want to buy from companies that put values into practice” (Crook, Todd, Combs, Woehr, and Ketchen 446).

Unfortunately, such conditions are less observed by firm owners who focus on meeting the production contractual agreements through reduced costs of production such as expenditure on labor. For example, in China and other developing nations, garment factories are commonplace where workers execute their daily routines in an environment with fiber dust-enriched air (Powell and Zwolinski 461). To make the conditions of the workers even worse, employees in the low-cost mass production factories are under paid.

The term ‘underpaid’ means that employees in an organization are paid salaries and wages that make it impossible for them to afford their basic needs. “Sweatshop workers often do not earn enough money to buy the products that they make, even though such items are often commonplace goods such as t-shirts, shoes, and toys” (Powell and Zwolinski 460). This finding is perhaps well evidenced by the case of Honduran garment manufacturing factory.

In 2003, employees at the factory were paid only 0.24 US dollars for every sweatshirt made and 0.15 US dollars for a long sleeved t-shirt. Sweatshirts went for 50 US dollars in the retail market. This implies that even if a worker would make 100 sweatshirts in a day, he or she would still not afford a single sweatshirt that he or she made, with other daily needs notwithstanding. This case highlights another challenge with outsourcing from Asian vendors whose operations take after these sweatshops based on the prevailing issue of employee exploitation.

In the debates of outsourcing from Asia, employee exploitation is a phenomenal issue. For instance, over several years, Nike has been accused that it employs children in its Cambodia-based plants. While the stalemate of the company’s accusation for employment of children remains unresolved according to Boggan, there are immense concerns that the company makes use of a very minimal portion of the cost of production of its pair of shoes (70 pounds) in the payment of labor (Boggan Para.5).

Amid the high calls for Nike to ensure that workers within its Asian production plants are remunerated accordingly, the company “treated sweatshop allegations as an issue of public relations rather than an issue of human rights ” (Boggan Para. 21). Measures to provide good working conditions at the Nike plants in Asian countries face challenges that emanate from managers and employees. This case evidences that outsourcing in Asia in a bid to cut production costs is also accompanied by hidden costs such as bad reputation.

Conclusion

In conclusion, labor costs amount to a significant portion of the total cost of a product. In a bid to reduce the cost of products that are offered for sale in the global markets, organizations seek strategies of ensuring that the prices of their products are low enough. In this quest, apart from outsourcing manufacturing services, western organizations are even outsourcing services such as customer care by transferring call centers to nations where living standards are lower.

Works Cited

Bertscherk, Irene, and Ulrich Kaiser. “Productivity Effects of Organizational Change: Microeconometric Evidence.” Management Science 5.2(2004): 91-99. Print.

Boggan, Steve. Nike Admits to Mistakes Over Child Labor. 2001. Web.

Crook, Russell, Samuel Todd, James Combs, David Woehr, and David Ketchen. “Does human capital matter? A meta-analysis of the relationship between human capital and firm performance.” Journal of Applied Psychology 96.3 (2011): 443-456. Print.

Gellar, Scott. “Scared safe: How to use fear to motivate safety involvement”. Occupational Health and Safety 6.1(2003): 6-10. Print.

Kathawala, Yunus, Ren Zhang, and Jing Shao. “Global Outsourcing and Its Impacts on Organizations: Problems and Issues.” International Journal of Outsourcing Operations Management 1.2(2005): 185-196. Print.

McCormack, Richard. “Accenture: Offshore Outsourcing Has Not Worked.” Manufacturing & Technology News, 18.7(2011): 212-231. Print.

Mucha, Susan. “Calculating the Total Costs of Offshore Outsourcing.” The Economist 11.3(2003): 28-30. Print.

Powell, Benjamin, and Matt Zwolinski. “The Ethics and Economic Case Against Sweatshop Labor.” Journal of Busness Ethics 107.4(2012): 449-472. Print.

Outsourcing is a term used to describe the practice of hiring foreign labor force. A country that hires employees from other countries based on skills and experience is said to be practicing outsourcing. Outsourcing is beneficial in most cases but there are other incidences where it may cause negative effects. Bad working conditions involves bad working environment.

This include poor leadership, lack of democracy, dictatorship, poor remunerations, no respect for workers rights and lack of both social and ethical considerations at the work place. Bad working conditions leads to poor living standards and low esteem (Mattingly, 2006).

The article (news story) talks about the increasing level of unemployment and the working poor. According to the article, the rising level of unemployment in India is due increasing level of hiring foreign workers. The country believes that these foreign workers have got appropriate skills to improvise, innovate and implement projects that will contribute to growth in economy.

On the other hand, the local skilled and unskilled workers have been left unemployed. Those employed are facing challenges of poor working conditions since special consideration is given to the outsourced labor force. It is this conditions that have led to emergence of a group of workers known as the working poor and high levels of unemployment.

The working poor are facing harsh working conditions. Some are being treated like slaves with no opportunities to advance their skills. The local workers are languishing in poverty and poor living conditions. They are struggling to earn a living despite being dedicated workers (Graham, 2005). This connects to the social concept of discrimination in terms of employment and working conditions in the following ways.

There is social discrimination in terms of employment where by the country prefers to employ workers from other countries other than their own. There is also further discrimination where by the foreign workers are provided with good working conditions unlike the local workers (Singh, 2005). Therefore, I argue that outsourcing and bad working conditions contribute to rise in unemployment and negative social-cultural effects.

The purpose of this paper is to sociologically argue out the above thesis statement and give illustrations that will support it. This is by arguing out on how outsourcing leads to unemployment and the negative social-cultural effects that are associated with it.

According to the news story, the decision by the government of India to hire foreign labor to set up various call centers in the country led to rise in the level of unemployment especially among the local Indians who posses adequate skills to perform the such duties. This work could have been done by the local Indians instead of being given to foreign employees. This is a demonstration of high level of social discrimination in terms of employment.

It leads to local people loosing opportunities to foreign people. There is racial discrimination where by the country decides to employ other races other than its own race. Besides this, there is also social discrimination in terms of working conditions. The hired workers are being given special treatment and considerations unlike the local workers. The local employees remain poor despite their hard work.

Sociologically, there was hatred among the workers where by the local workers developed a negative attitude towards the foreign workers at the call centers. The social correlation among these groups of workers became poor and efficiency of work declined. The local workers felt that the foreign workers were being given special considerations and priority. All this led to poor social interaction and communication among the workers (Graham, 2005).

Considering social-cultural effects, “outsourcing led to serious negative impacts in Indian cultural and social life. This involved language, identity, gender and emergence of western kind of lifestyle” (Graham, 2005, p. 11). Language issues brought problems like poor communication as well as low understanding between the local and hired employees.

This led to social divisions among the employees. In most cases, foreign employees tend to introduce their culture in the receiving countries. This leads to conflicts of culture due to resistance from the local people to adopt the new cultures. In India, there were recorded incidences of sexual harassment and adoption of the western culture in many call centers that were set up by the foreign employees.

“Multiple Personality Disorder and other psychiatric problems arose. Many call center workers changed in terms of western culture, accent, language and identity. The local workers were observed to copy the behaviors of the foreign workers” (Graham, 2005, p. 19). This is a social crisis that contradicts with the local social expectations of the country.

Once this happens, there is a high possibility of abuse of culture as well as race. The receiving country may be rendered culturally rootless due to the influence posed by the hired foreign workers. These workers influence large populations of the youths to adopt their social culture (Remesh, 2004).

Cultural alienation is another challenge brought about by outsourcing. Most of the workers are alienated from the rest of the population. This brings divisions in the family and other social classes.

Adoption of behaviors like smoking, working at night, pub culture and other western modes of lifestyle totally contradicts with the value systems of the local societies. The traditions and other beliefs which are highly nurtured by the local societies are being erased and this brings a lot of social friction between the foreign employees and local people.

In struggle to protect their own social cultural beliefs and practices, there is emergence of social disorder among the foreign workers and the local workers. These conflicts extend to the society as a whole. These were the problems faced by India when the government invested in the outsourcing industry to develop various call centers (Graham, 2005).

Recommendation

To solve the above problems, the government should reduce the practice of outsourcing and consider the local skilled workers. There should be no social discrimination among the workers even if they are from different countries. All the workers should be subjected to similar good working conditions. Proper rules and strategies should be put in place to avoid conflicts of culture when outsourcing is practiced. All this will enhance good social relations and interactions among the workers.

References

Graham, V. (2005). Labor Outsourcing, working poor and Unemployment in the Indian Information and Communication Technology Industry. Thesis submitted to Jawaharlal Nehru University, 1(2), 3-24.

Mattingly, D. (2006). Indian Call Centers: The Outsourcing of Good Jobs. Centre for Global Justice Conference Papers, 2(6), 46-59.

Remesh, B. (2004). Labor in Business Process Outsourcing: A Case Study of Call Centre Agents. Economic and Political Weekly, 40(7), 68-81.

Singh, P. (2005). World Unemployment and the working poor. Philadelphia: Temple University Press.

This kind of research utilizes the services of a standardized data collection tool referred to as questionnaire. The managers of departments concerned with IT outsourcing and offshoring are asked whether outsourcing offshoring has any impact pertaining to sales and general performance of an organization. The design specifically employs surveying whereby the managers in IT sections of various companies are requested to give their views on the benefits of the new technology and whether it lowers or increases the costs of operations (Grover, Cheon & Teng, 1996). The sample to be used will be representative meaning that the research will select the company’s IT officials randomly.

This research is occasionally referred to as factual knowledge and employs conventional arithmetical and statistical representations to compute results categorically. Quantitative researches make use of an average design, with a little insignificant inter-subject distinction of engendering a premise to be confirmed or refuted. In this research, hypothesis testing will be performed using mathematical and statistical techniques such as chi-square and regression, and is the foundation around which the entire research is calculated. The design permits randomization of any targeted clusters as well as organizing the required IT outsourcing respondents to be incorporated in the research if possible (MacLean & Mohr, 1999). A well-designed quantitative design influences only one variable at ago, or else statistical examination turns out to be burdensome and open to queries. Subsequent to statistical investigation of the outcomes, an all-inclusive response is arrived at, and the outcome scrutiny is legally conferred and published. Quantitative research furthermore sieves peripheral aspects, if suitably planned, and the outcomes achieved can be perceived to be authentic and equitable (Churchill & Iacobucci, 2004).

Operational Definition of Variables

After setting the study objectives and premises and describing the study arbitration, then the next step in the analytical procedure is to categorize operationally the significant variables and requisites of the study. Operational definitions present two crucial rationales, one being to set up the rules and proceedings that the research investigator will exploit in calculating the key variables of the research and secondly it offers clear subtext to terminologies that otherwise could be understood in abnormal ways. This investigation will enclose operational definitions of key variables and words. The dependent variable in this study is the impact of IT outsourcing and offshoring to businesses because it is affected by other variables for instance the kind of knowledge available in a business, the experience of the managers pertaining to outsourcing and off shoring and the educational level or the available trained staff in an organization. The personnel with sky-scraping dexterity or high educational levels are expected to apply the same dexterities in outsourcing or off shoring in the business. The operational definition of IT outsourcing knowledge in this study will be:

Acquaintance pertaining to IT outsourcing and = the number of faultless answers an IT

Off shoring plan Outsourcing and off shoring director in a firm provides to thirty questions asked on IT

Outsourcing

Besides the above operational definition, the researcher in this study will also categorize the IT outsourcing and off shoring correspondence basing on their knowledge of the new skill (Heeks, et al. 2001). This is done by setting up clusters of IT outsourcing knowledge, distinguishing between the respondents who have IT outsourcing and offshoring acquaintance (Carmel, & Agarwal, 2002). The clusters are alienated in terms of soaring familiarity, ordinary familiarity, diminutive knowledge and without information with reference to IT outsourcing and off shoring technology, and each grouping needs an operational decree that informs the researcher how to allocate any specified respondent to the class. This implies that an additional system of operationally defining the variables could be:

Soaring acquaintance = accurate replies to twenty eight or more of the thirty questions posed. They are those managers who have full knowledge pertaining to IT outsourcing.

Ordinary familiarity= exact answers to between ten and sixteen of the thirty

Questions posed. These are familiar with the new technology but do not really know its benefits and impacts to the

business

Diminutive familiarity=acceptable answers to between four and eight of the thirty questions posed in the questionnaire. This means that a particular group of top managers within the sampled population is not well

Conversant with the technology

Without familiarity= No perfect answers to every question posed. This Means that some of the top managers are not well acquainted

with outsourcing technology. This has a direct impact to the process of outsourcing or off shoring.

The investigator comments that the four clusters of the variable are jointly exclusive denoting that they will by no means superimpose. Depending on the operational rules acknowledged, IT outsourcing and off shoring respondent cannot be placed in the cluster “soaring familiarity” and concurrently be positioned in the “ordinary,” “diminutive,” or “without familiarity” categories (Jennex & Adelakun, 2003). The clusters are additionally entirely comprehensive. There are four clusters.

References

Churchill, G.A. & Iacobucci, D. (2004). Marketing Research with Infortrac: Methodological Foundations. 9 Edn. New York, NY: Southwestern Pub

MacLean, M. & Mohr, M.M. (1999). Teacher-researcher at Work. Berkeley, CA: National Writing Project.

Carmel, E. & Agarwal, R. (2002). The maturation of offshore sourcing of information technology work. MIS Quarterly Executive, 1 (2), 65–78.

Grover, V., Cheon, M. & Teng, J. (1996). The effect of service quality and partnership on the outsourcing of information systems functions. Journal of Management Information Systems, 12 (4), 89–117.

Heeks, R. et al. (2001). Synching or sinking: Global software outsourcing relationships. IEEE Software, 18 (2), 54–60.

Jennex, M.E. & Adelakun, O. (2003). Success factors for offshore system development. Journal of Information Technology Cases and Applications, 5 (3), 12–31.

Information technology outsourcing has over the last several decades experienced substantial growth to become a basic strategy employed by many organizations across the world, with academics and industry suggesting that this growth is bound to be prolonged and maintained in the near future (Abu-Musa, 2011).

These authors further posit that IT related activities, which were once executed almost exclusively in-house by most organizations, are now regularly outsourced or off-shored to dedicated vendors.

But as observed by Goodman & Ramer (2007), outsourcing or offshoring of IT services inflates the potential for organizations to be exposed to a number of system vulnerabilities, mainly due to the intimate connections with network systems.

This paper purposes to not only describe how Northern Arizona Healthcare hospital chain has outsourced an intrusion detection system (IDS) to prevent such system vulnerabilities on critical patient health information, but also to outline some potential advantages and disadvantages of outsourcing this component.

According to Schoberle (2007) personal health information (PHI) privacy and security concerns should be central to any health organization as the health data is perceived as one of the most private facets of life for many people.

To secure such data, therefore, effective IDS can prove to be an invaluable tool because it would have the capacity to perform early detection of malicious activity and probably thwart more serious attacks to the protected site (Barnes, n.d.).

In this regard, the Northern Arizona Healthcare hospital chain has outsourced IDS from Perot Systems to assist in the process of analyzing logs to determine system vulnerabilities, auditing and prevent intrusion (Brenner, 2005; Bezroukov, 2011).

The IDS can be said to form the third layer of the physical security of the health organization outsourced from a third party (Perot Systems) with a view to manage, monitor, and respond to physical security alerts through systematic and coordinated analysis of system logs to detect system and network vulnerabilities.

The IDS in Northern Arizona Healthcare is basically composed of three components, which include sensors, analyzers, and the user interface (Brenner, 2005). While the sensors are charged with the responsibility of gathering data or evidence of an intrusion, the analyzers are responsible for receiving input from the sensors and determining if an intrusion has really occurred.

Indeed, it is the analyzers that provide direction on what actions the Managed Security Service Provider (Perot Systems) should take as a consequence of the intrusion. Lastly, the user interface to IDS allows the analysts to observe output from the network system or manage the behavior noted in the system (Brenner, 2005; Ya-Yueh, 2011).

Although the IDS does not prevent malicious actions or network threats, it has been instrumental in assisting the health organization get early warning signs of a malicious attack or misuse, thus enabling the Managed Security Service Provider to not only alter installations defensive posture to enhance resistance to attack, but also confirm secure configurations and operation of other security features such as firewalls (Ya-Yueh, 2011).

Consequently, intrusions and attacks on the organization’s patient health information database have been reduced.

Available literature demonstrates that there exist many advantages and several disadvantages of outsourcing IDS to enhance security for sensitive patient information.

One of the main advantages of outsourcing IDS to a Managed Security Service Provider, According to Fitzparick (2008), “…is that security should be the MSSP’s key business function; thus, they should focus their resources on the current security technologies, strategies, education and personnel while monitoring the internet for the latest vulnerabilities and threats” (p. 14-15).

Outsourcing not only ensures that the health organization is able to create competitiveness through focusing on core activities and engaging in cost and efficiency savings, but it increases productivity, enhances operational control, and facilitates staffing flexibility (Abu-Musa, 2011 ).

As already mentioned, outsourcing information security has its own downsides. Fitzparick (2008) argues that as the responsibility for intrusion detection shifts to the third party service provider, “…the client loses experience, knowledge, and skills that are gained by investigating security events; technical skills are dulled as the internal team relies on the knowledge of the MSSP analyst” (p. 17).

Second, the service provider may not have the capacity to understand their client’s security requirements, thereby occasioning a situation that will see the client receive very generic service from the provider.

Outsourcing also increases the potential for possible attacks and other system vulnerabilities by elongating “communication channels and increasing the number of organizations and computer networks that touch the data” (Goodman & Ramer, 2007, p. 812). Lastly, it is expensive to outsource IDS.

To conclude, it is indeed true that ensuring the security and safety of patient health information should be a foremost responsibility for any health organization (Schoberle, 2007).

This paper has discussed how such information could be secured through outsourcing intrusion detection and prevention components, and the pros and cons associated with such outsourcing. The onus, therefore, should be for individual health organizations to decide how best they could protect sensitive patient health information – and outsourcing IDS represent one of the many possibilities.

Reference List

Abu-Musa, A.A. (2011). Exploring information systems/technology outsourcing in Saudi organizations: An empirical study. Journal of Accounting Business & Management, 18(2), 17-73. Retrieved from Business Source Premier Database.

Barnes, J. (n.d.). Intrusion detection systems in hospitals: What, why, and where. Web.

Bezroukov, N. (2011). Syslog analyzers. Web.

Brenner, B. (2005). Report: IT shops lax about logging. Web.

Fitzparick, V. (2008). Intrusion detection and prevention: In-sourced or out-sourced. SANS Institute.

Goodman, S.E., & Ramer, R. (2007). Global sourcing of IT services and information security: Prudence before playing. Communications of AIS, 20(2), 812-823. Retrieved from Business Source Premier Database.

Schoberle, C. (2007). Personal health information: Privacy and security considerations in outsourcing and offshoring decisions. Web.

Ya-Yueh, S. (2011). Effects of the outsourcing of information systems on user satisfaction: An empirical study at Taiwanese hospitals. International Journal of Management, 28(1), 127-138. Retrieved from Business Source Premier Database.

Introduction

Operations risk management is an area that has a significant impact on the strategic values of a healthcare service provider. The study engaged a qualitative research approach to investigate, for the purpose of better service delivery, how to manage operational risks that arise due to the outsourcing of IT services, and why such risks happen. It was established that healthcare service providers use different models to identify and plan for the best strategies to address operational risks.

In the context of managing operational risks, the outstanding risks that were identified include service level agreements, changes in pricing, changes in the relationship with the vendor, hardware and software changes, and management issues.

Often, it emerged that healthcare service providers need to develop an appropriate model for selecting the right vendor to minimize risks. These risks include those that arise due to poor vendor selection that often leads to higher costs and poor service delivery. The recommended operations risk management steps include risk planning, identification, qualitative and quantitative risk analysis, developing a risk response plan, and putting in place a risk monitoring and control plan. The strategies identified as appropriate for risk management include accepting risks, putting methods in place to avoid the risks, exploiting opportunities for risk avoidance, transferring the risks, sharing the risks, and mitigating the risks to effectively manage them.

Significance of the Study

The study is critical because it provides healthcare service providers with the right approaches to use in selecting the right vendor for outsourcing non-core functions. The goal is to effectively achieve the strategic objectives of cost savings, technology optimization, and the use of professional expertise in specific domains by focusing on core functions. In addition, managing operational risks when outsourcing IT services is critical for a properly functioning healthcare service provider to lower the costs associated with outsourcing risks.

Conceptual discussion

The study was conceptualized in terms of non-core functions of healthcare services that were outsourced and focused on core functions to lower operating costs, increase productivity and performance, and provide better quality services to increase trust among consumers. By outsourcing non-core functions, operational risks associated with outsourcing key IT services, such as service level agreements, data privacy and security, hidden costs, and data entry errors, arise as shown in figure 1.

Review of the Literature

Outsourcing in health care

A research study by Heeks which investigated outsourcing of healthcare services among 12 service providers, using a methodology that accurately reflected the research problem, showed that the practice is an emerging global trend that most companies are adopting (129). Heeks notes that healthcare service delivery is driven by industry players, such as insurance companies, hospitals, and pharmaceutical companies (129).

Insurance companies are finding it difficult to address the increasing number of people wanting to process their insurance claims quickly. Streamlining such services through outsourced service delivery such as using information technology running applications on advanced infrastructure reduces the risk of incurring high operational costs when adopting new insurance plans into the market (Heckmann et al. 120). Besides, health care providers, including hospitals, outsource non-core services using IT cloud platforms, among others, to create an environment that fosters concentration in the core functions.

This enables the healthcare provider to maximize reimbursements and increase accurate and effective cash flow cycles by integrating information systems into service delivery through accurate data analysis. According to Heckmann et al., hospitals are concerned with patient enrollment and strategic planning, medical care (e.g., medical imaging, device monitoring, and medical transcription), and revenue cycle management through IT-based systems (121). According to Quinn, pharmaceutical outsourcing focuses on drug discovery, pre-clinical trials, clinical operations, data management, and stats, and medical writing, which are generally referred to as clinical research (9).

Researchers including Quinn have concluded that often, the services are either IT-based or non-IT-based (9). In each case of outsourcing, different operational risks are bound to happen that need to be managed.

What can be outsourced in health care?

Roberts reviewed several academic research articles that revealed that pharmaceutical, insurance, health care, and information technology services when outsourced lead to a significant number of benefits (239). The clinical services that can be outsourced include patient care in the areas of diagnostic imaging, hospitalist staffing, anesthesia, dialysis, and emergency department staffing. Recent studies have shown that healthcare service providers outsource non-core services to information technology vendors to increase the quality and accuracy of data analysis.

Data entry operations and analysis is done using modern and-up-to date technologies. It has been established that outsourcing information technology services such as Business Process Management (BPM) enable the service provider to concentrate on core services, which is a strategic approach for saving money that leads to better quality services. In addition, Roberts argues that the need to address the increasing demand for healthcare services in the medical industry demands the integration of devices that use networked computers, servers, laptops, and personal digital assistants (PDAs) (239).

According to Quinn, the aim is to manage the data generated from the services delivered to patients, and other people seeking consultation services, using the devices (9). Examples include billing records, electronic management of medical records, and information management. Looking at another area, the types of pharmaceutical services that are outsourced include exploration of the best methods to test a drug to determine its behavior on the human agent. In addition, trials are conducted on patients who volunteer, to find enough data for analysis so that researchers can establish the level of metabolism and toxicity when the drug has been taken.

Top reasons for outsourcing health care

A case study by Quinn to determine the top reasons for outsourcing healthcare services in the healthcare setting enumerated factors such as cash infusion and lower infrastructure investment costs (9). The results show that lower costs are achieved by cutting back on investing in expensive infrastructure such as state-of-the-art IT technologies. Additional savings result from avoiding the cost of investing in expensive call centers and avoiding investing in highly qualified medical and IT staff.

The results include controlling operating costs, which translates into major cost savings in addition to accelerating the migration into new technologies. Such investments lead to increased performance and minimum downtime for better productivity and high-quality service delivery.

Another reason cited by Roberts involves disruptive risks such as seasonal workflows (239). Outsourcing helps organizations overcome the problem by forcing them to efficiently deal with seasonal peak workloads. Outsourcing enables a company to focus on its core functions and enhance risk management, such as addressing issues related to technical crises, as well as disaster recovery and risk management. Improving operational performance to the level of world-class infrastructure and capabilities, based on excellent service delivery by dedicated teams who operate within specialized domains with expert experience, leads to greater operational efficiencies (Logan 25).

The reasons are summarized as specialization, quality of services, cost savings, and effective staffing. The approach has been demonstrated in best practices in quality improvement through better clinical governance (Logan 25). Such approaches are critical enablers for different types of risks that happen in the outsourcing program. Operational risk management in outsourcing has an overall positive effect on value innovation.

The challenges of outsourcing in health care

Logan argues that the majority of practitioners lack the ability to operate sophisticated applications and mission-critical systems (26). Outsourcing such services to poorly qualified vendors is a source of critical errors such as medical billing mistakes. Logan established that 80% of the medical bills contain serious errors that need to be corrected by specialized IT professionals. Researchers including Roberts note that establishing and enforcing service level agreements is a significant challenge that institutions need to address (245).

In addition, emerging challenges such as the introduction of new hardware, under-performing services, sudden termination of services, and poorly functioning applications can breach parts of the contract. Such occurrences emerge in the form of business risks in the healthcare service industry. Here, it is critical for both parties involved in the agreement to ensure that cost upon termination and other obligations need to be specified upfront. It is also critical to ensure that the destruction of data or its maintenance is addressed, to keep it safe from unauthorized access and use.

According to Roberts, price changes have been observed to be the sources of legal redress when certain clauses in the contract have been violated (240). Here, price changes happen due to changing hardware and software costs and the underlying technology which makes change overly difficult. Additional challenges that happen in the industry include service change over time, third party license issues, patient safety issues, and ease of using the available solutions. Other challenges include problems with negotiating and building agreements, vendor selection process, building an outsourced team, outsourcing clinical services, and determining the correct strategy for service transition.

Outsourcing healthcare services: pros and cons

As shown in Table 1, Roberts analyzed 100 articles on the pros and cons of outsourcing healthcare services and enumerated the findings as being critical in outsourcing for IT healthcare services. Based on the Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis, key elements emerge in the discourse. The strengths include improved quality of services, lower operating costs, use of professional personnel, ability to get better and easy solutions, and high-quality service delivery.

The weaknesses include hidden costs, vendor risks, staffing problems, and increasing variable costs such as related costs. The opportunities include employee buy-ins, adoption of various management practices, and sharing of risks among others. The threats that emerge include practitioner operations management, technology mismatch, operations failure, and data security issues. Technology mismatch happens when healthcare service providers outsource their services to IT firms that operate new applications and infrastructure that are not interoperable with the technology of the outsourcing firm.

Table 1. SWOT.

Strategic approach to outsourcing

According to Roberts, various healthcare service providers use different models to outsource medical services (250). While the models remain diverse, strategic outsourcing is seen as a model that adds value for the patients or those who seek medical advice. When outsourcing, the service provider must identify those services in the value chain that need to be outsourced. It is important to identify the activities that remain within the core competence and strategic focus of the organization.

Quinn evaluated both linear and modularized outsourcing process models and revealed that the process-oriented model focuses on end-to-end outsourcing of business processes without emphasizing the underlying hierarchical and functional structures (11).

Further investigations by Roberts showed that embedded within the strategic outsourcing paradigm are key steps, which include developing an outsourcing relationship with experts from the internal and external environments, as well as establishing the core functions to outsource (250). Heeks identified additional steps that include creating a request for proposal, evaluating prospective vendors, creating an agreement for the outsourcing to take effect, and executing the best outsourcing contract based on a reliable governance structure (130).

The key elements emerging in the discourse include establishing the goals of outsourcing arrangements, identifying risk factors, gains in competitive advantages, internal and external expertise, types of vendors, and service level agreements. Each case involves the improvement of costs, service quality, customer satisfaction, operational effectiveness, and value-added outcomes. Roberts notes that when incorporating the best practices and different outsourcing approaches, it is possible to emphasize the value stream that creates value and perfect service delivery (250).

Operational Risk Management in outsourcing services in health care

While outsourcing remains an effective solution for optimizing high-quality services, certain risks accompany the process. According to Logan, loss of control and dependence on the vendor are strategic risks that executives fear could have a negative impact on the operations of a company (22). Loss of internal technical expertise and sensitive data, violations of service level agreements, and poor vendor performance or complete nonperformance constitute the additional risks. Different models have been proposed for operations risk management.

It is evident that outsourcing in health care is a complex phenomenon that is related to regulatory bodies, technological development, and strategic issues and plans that have an impact on the effectiveness of IT healthcare outsourcing. Organizational issues that affect outsourcing include compliance with issues in the business environment, the need to develop new and better applications and information systems, improved service quality, and the nature of the relationship between IT services provider and the healthcare service provider.

Outsourcing IT services causes additional issues that can be categorized into strategic issues. Strategic issues include cost control, reduced transaction costs, greater flexibility, cost of hardware, strategic alliance, and reduced capital costs. In addition, support for vertical integration is a source of risk that organizations need to factor into their calculations (Roberts 240). On the one hand, regulatory issues include ownership, terms, and conditions of the contract, business relationship with the origin of the hardware devices, and the underlying politics. On the other hand, risks happen due to technical issues that include rapid changes in technology, achieving the best practices, and accessing new technologies and skills.

Research studies have revealed that outsourcing IT services provide better and more accurate services that comply with dynamically changing billing needs that require hospitals to invest in training and retraining personnel. As another benefit, outsourcing IT services accommodate billing changes that happen dynamically and enable the service provider to address core functions (Roberts 241). It is possible to create a positive collaboration between the service provider and the patient to allow for predictable cash flow. Certified IT firms that offer outsourced services provide professional and efficient services in compliance with healthcare laws, including taxes, employee benefits, and salaries.

Information technology-based outsourcing operations promise to offer better service delivery, reduced service cost, better business consulting, and management focuses on the core functions of providing healthcare services for better and high-quality service delivery (Heckmann et al. 119).

The specific areas of IT outsourcing include finance and accounting, human resource management, tracking services that are offered to determine the progress of the patients, and the ability to use complex applications and other infrastructure that need specialized personnel to operate (Roberts 240). It is imperative to note that the majority of IT employees in hospitals in many parts of the world do not operate mission-critical services and applications that comply with new data privacy and security laws.

The use of such data centers, when management within the hospitals does not have specialized personnel, increases the risk of data breaches and other problems associated with data entry. Billing problems due to the use of less specialized and less experienced personnel have been noted among hospitals that use complex IT infrastructure. It has been estimated that over 80% of the bills received by insurance companies contain errors that result from poor data entry practices.

Operational risks in outsourcing IT services in health care

Researchers have established that outsourcing IT services is accompanied by several risks that need to be addressed. Among these risks is the possibility of weak management (Berger 219). The rationale is that if the vendor fails to provide the desired quality services and outsources to a third party, the result can lead to costly problems, quality issues, and privacy issues (Logan 22). Sometimes inexperienced staff can be a critical source of risks.

Such outsourcing can cause errors in data entry, lack of compliance with regulations, and breach of service level agreements, leading to lower quality services. Besides, it is possible for a company to experience a loss due to uncertainties in the market.

Introduction to Outsourcing IT Services in Health Care

Researchers have identified an approach, commonly used in the healthcare industry when managing operations risks. The first step involves establishing the context in which the risks occur, followed by risk identification, analysis in the context of qualitative and quantitative risks, risk evaluation, and risk treatment (Berger 219). The method resonates well within the commonly used enterprise risk management framework. After the context of operational risks has been established, the healthcare organization can establish the best risk mitigation strategies.

Operational risks include uncertainties related to outsourcing threats and mitigating those risks using managerial resources. As mentioned above, at the outset, risk planning includes identifying the context in which risks occur (Berger 219). The key inputs into this high-level process include determining the amount and types of risks that fall within the scope of the outsourced processes and making sure they are clearly defined in the scope statement that details the type of risks and associated threat levels.

Among the methods that have been suggested include the alignment of risk appetite and strategy, managing multiple and cross-enterprise risks, reducing operational surprises, seizing opportunities, and enhancing risk response. According to Quinn, different authors have suggested the cost management plan as an important input because of the general costs incurred in the risk management process (13). Within the framework is a schedule management plan that incorporates the operational risk management activities, showing internal and external system constraints. The planning components include a communication management plan that shows the specific risks and how to address them and basic enterprise environmental factors that reflect the nature of risks.

The Fishbone (Ishikawa) Diagram

The next step is to identify the risks. Different models have been proposed for risk identification, and one popular method that has widely been used in the healthcare industry can be conceptualized and expressed in the Fishbone (Ishikawa) Diagram.

The importance of operations risk management underpins the need to use an appropriate paradigm for risk identification. While various modes have been proposed for risk identification, the Fishbone (Ishikawa) Diagram shown in figure 2 provides details of the drivers of the risks and the resulting cause and effects.

As depicted in figure 2, the primary risks include compliance with the standards and guidelines for third party information management, business continuity in case of the third-party hardware and software system failures, loss of information confidentiality, and operational and transaction risks. Operational and transaction risks arise because of process flaws in any of the processes involved in the exchange of data between the healthcare service provider and the information technology service provider.

Secondary risks include the validity of the service provider, quality of service, and the discontinuance of service delivery. Other secondary risks include the inability to serve an increasing customer base besides inappropriate quality responsiveness, assurance, empathy, and trust. The overall result is the problem of loss of control and business continuity in the provision of outsourced IT services. However, the risks can be addressed through an appropriate risk management process.

Research Methodology

The study was based on a qualitative review of literature and case studies of organizations that have outsourced services to determine the sources of operational risks and how to manage these risks. A qualitative research method was deemed to fit well into the study because of the centrality of linking the research approach with the desired results of the study. The research approach was used to answer the main research question on how to manage operations risk in outsourcing healthcare services (Berger 219). A systematically predefined procedure was used to address the research questions.

The predefined approach consisted of analyzing the case study and collecting evidence from the literature review, which was a secondary source of data to address the research questions. One of the outstanding features of the qualitative research approach was seeking to explore the phenomena based on an analysis that provides a detailed description of the relationship that exists between outsourcing and operations risk management.

Using the qualitative research paradigm had certain advantages that made the approach appropriate for the study. The credibility of the results was deemed to be one of the advantages. Besides credibility, researchers point out that qualitative research results are transferable. It was established that qualitative research results are dependable. Dependability is an aspect of reliability and the ability to replicate results. In summary, it was established that the research is systematic, dependable, reliable, accurate, and reproducible.

Result and Discussion

Discussion

Many companies specializing in the provision of healthcare services have opted to outsource non-core functions and concentrate on core functions to increase the quality of services, enhance professional learning in the domain of specialized services, improve professional competence, lower operational and labor costs, tap into and leverage knowledge and other technologies, and share or mitigate risks associated with operating IT infrastructure.

Observations indicate that information technology services are widely outsourced to different vendors in the healthcare industry with the objective of minimizing costs. When outsourcing, it is imperative to use methods that have been proved to work to avoid or minimize the effects of associated risks. Moreover, it is imperative to manage the operational risks associated with outsourcing IT services through a risk management plan.

The key steps include planning, identification, qualitative and quantitative analysis, risk response, and a plan for risk monitoring and control. Typical operational risks that were identified to have implications on outsourcing IT functions include weak management approaches, employing inexperienced staff, uncertainties in the business environment, breaching of the service level agreements, and use of outdated technology.

Conclusion & Recommendation

In conclusion, outsourcing is a process that continues to be embraced by different organizations offering healthcare services in many parts of the world. Outsourcing IT functions comes with various benefits such as allowing the outsourcing company to concentrate on its core functions to gain competitive advantage and reduce cost. In addition, healthcare service providers gain greater competencies leading to better innovation capabilities, organizational flexibility, use of state-of-the-art technologies, lower training costs, expert focus on the domain of interest, access to modern technologies, and optimization of vendor economies of scale.

However, significant operational risks are possible when outsourcing IT services that should be given adequate attention to optimizing the outsourced services. Best practices for operational risk management include risk planning to identify and mitigate the risks. However, different approaches have been suggested to address operational risks such as avoiding the risks, transferring the risks, mitigation of the risks, enhancing the risks, sharing, exploiting, and accepting the risks. In any case, based on the results of the study, it can be recommended that outsourcing healthcare organizations need to first establish the financial standing, legal compliance status, technical capabilities, competencies, and history of the vendor organization before awarding a contract to an IT firm.

Works Cited

Berger, Roni. “Now I see it, now I don’t: Researcher’s position and reflexivity in qualitative research.” Qualitative Research 15.2 (2015): 219-234. Print.

Heckmann, Iris, Tina Comes, and Stefan Nickel. “A critical review on supply chain risk–Definition, measure and modeling.” Omega 52 (2015): 119-132. Print.

Heeks, Richard. “Health information systems: Failure, success and improvisation.” International journal of medical informatics 75.2 (2006): 125-137. Print.

Logan, Mary Spencer. “Using agency theory to design successful outsourcing relationships.” The International Journal of Logistics Management 11.2 (2000): 21-32. Print.

Quinn, James Brian. “Strategic outsourcing: leveraging knowledge capabilities.” MIT Sloan Management Review 40.4 (1999): 9. Print.

Roberts, Velma. “Managing strategic outsourcing in the healthcare industry.” Journal of Healthcare Management 46.4 (2001): 239-250. Print.

The increasing healthcare cost has put enormous pressure on healthcare providers recently. On the search for innovate ways of controlling the medical care price and maintaining high service levels, healthcare leaders come across the question of outsourcing. Most commonly, hospitals outsource such non-core services as food preparation, cleaning, engineering, and laundry (Roberts, Henderson, Olive, & Obaka, 2013). On the one hand, giving up these services to specialized companies can decrease the medical care cost for customers and enable hospital authorities to focus on the core medical necessities (Tadia et al., 2016). On the other hand, outsourcing may raise certain legal, ethical, and moral issues to medical care authorities. While the decision to outsource services may be hard to make, it may offer very enticing financial results.

Outsourcing Food Services

The choice of Deaconess Clinic in Billings, Montana to outsource food services is rational and common in today’s practice. In the food service business, outsourcing vendors can take up food preparation and serving to patients, employees, and visitors (Roberts et al., 2013). No doubt, some concerns may arise from the decision of outsourcing the cooking and serving to healthcare users. It is important to realize and consider with all cautiousness that various complex legal issues may arise. For example, an outsourcing vendor’s employee failed to follow the prescribed patient’s diet and served inappropriate food that resulted in severe symptoms’ aggravation. In this situation, it is not clear who is at fault, the hospital, the outsourcing vendor, the individual employee, or all the above. There are also moral questions, such as leaving a whole department without jobs after turning to outsourcing.

Despite the concerns mentioned above choosing outside service providers for food preparation implement considerable improvements in the question. For instance, in some hospitals “innovative ideas, such as room service style dining, provide an opportunity for the patients to order a meal at their convenience” (Roberts et al., 2013, p. 2). Moreover, turning to outsourcing food services has made the matter more cost-efficient and allowed the hospital to achieve a competitive advantage by focusing on their core competencies (Roberts et al., 2013).

Most hospitals choose to offer dining services within the hospital building, as it poses apparent advantages for the clients. First, there is no need for clients to go anywhere outside the hospital as the cafeteria is easy to access. Second, the food service employees feel a sense of ownership of their job and feel connected to the hospital, as the case of Deaconess Clinic showed (Stevenson, 2018). Third, there is a possibility to rehire the previous staff thus avoiding some ethical and moral problems with ex-employees. At the same time, there is also a rationale in keeping food services outside the hospital building. The space cafeteria occupies may be used for additional doctors’ offices or other core-related rooms. Moreover, touching upon the legal aspect, if a client gets food poisoning outside the hospital building, no legal charges can be put against hospital authorities (Roberts et al., 2013). In short, even though there are clear drawbacks in outsourcing hospital’s food service, the advantages of having catering on or out of campus surpass all expectations.

Outsourcing Housekeeping

Outsourcing cleaning and housekeeping is also typical in the United States and Europe, though turning to outside service providers is a matter of more significant consideration than in the case with food service. Healthcare cleaners deal with blood and body fluids, human tissue and non-biological matter such as needles, wound dressings, and packaging (Siganporia et al., 2016). Therefore, these employees are a high-risk group for occupational injuries and need specialized training to perform a high level of service (Siganporia et al., 2016). Besides that, housekeeping workers are more isolated and do not feel an emotional connection with the hospital that leads to a high employee turnover rate (Stevenson, 2018).

At the same time, the advantages of having housekeeping duties outsourced are numerous and significant. First, hiring an outside firm to provide cleaning services is more cost-efficient. Outsourcing vendors buy all the supplies needed for the job at a much lower price and have all the equipment intact to operate anytime. Second, as in the case with food service, giving up more non-core competencies to outside service providers enable the hospital authorities to focus on the medical issues (Siganporia et al., 2016).

Due to the facts mentioned above the decision of outsourcing housekeeping may appear hard to make. However, there is a way to embrace all the advantages and avoid most of the problems concerning the matter. There is always a possibility to hire the employees back but using the outsource company to manage housekeeping, as the Deaconess Clinic in Billings, Montana did (Stevenson, 2018). On the one hand, this solution allows the hospital to keep well-trained and experienced employees that already feel connected to the hospital (Siganporia et al., 2016). On the other hand, hospital authorities save money by letting the specialized company take care of the cleaning. In brief, while there may appear to be some obvious problems with outsourced housekeeping employees, hospital managers should consider outsourcing the matter avoiding drawbacks.

Outsourcing Laundry

The question with giving up laundry to outside service providers is more apparent than with giving up any other competence. As Tadia et al. (2016) mention, there are no obvious drawbacks in outsourcing laundry except for a minor increase in time taken to wash linen. Large companies, like Sodexo, offer laundry services at the hospital facility or Sodexo’s building (Roberts et al., 2013). The laundry services can process and return laundry within one day, thus making the drawback mentioned above not relevant. Roberts et al. (2013) state that “two or more hospitals might collaborate on a joint laundry service to obtain better value” than if trying to do it alone (p.2). The rationale here is that teaming with another hospital, lowers the non-direct cost of laundry services, such as transportation, workforce, and equipment (Tadia et al., 2016). It is especially true for hospitals that are located in the same vicinity, as transportation costs decrease considerably. Overall, letting an outside company manage hospital’s laundry is rational particularly if joining other hospitals.

Conclusion

The belief of hospitals’ management that their staff can perform a better job at a lower price than outsourcing vendors is slowly shrinking in popularity. More hospitals consider outsourcing their support services, like food preparation, laundry, housekeeping, and engineering, to reduce operating costs every day. Moreover, healthcare providers benefit in service level by focusing on their core competencies and letting the professional deal with support services. Despite considerable drawbacks, the researchers examined in the paper advise hospitals’ authorities to turn their heads to outsourcing non-core competencies to outside service providers.

References

Roberts, J., Henderson, J., Olive, L., & Obaka, D. (2013). A Review of outsourcing of services in health care organizations. Journal of Outsourcing & Organizational Information Management, 1-10.

Siganporia, P., Astrakianakis, G., Alamgir, H., Ostry, A., Nicol, A., & Koehoorn, M. (2016). Hospital support services and the impacts of outsourcing on occupational health and safety. International Journal of Occupational and Environmental Health, 22(4), 274-282.

Stevenson, W.J. (2018). Operations and management. Thirteenth edition. New York, NY: McGraw Hill Education.

Tadia, V., Gupta, S., Arya, S., Lathwal, A., Jain, K., & Ahlawat, R. (2016). Why switch to rental? Costing of laundry services at an Apex Tertiary Care Hospital from the view of outsourcing based on rental linen management services. International Journal of Research Foundation of Hospital and Health Care Administration, 4(2), 79-88.

Introduction

Outsourcing is a strategy used by organizations to minimize costs by assigning different tasks to a number of third-party suppliers (Kremic, Tukel and Rom 469). This process is done to reduce expenses and acquire quality results from the right professionals. Some factors explain why healthcare institutions and companies outsource. An organization can acquire new products or services without purchasing expensive technologies. As well, the company can acquire new services and products within the shortest time possible. This scenario explains why healthcare facilities outsource specific services. A healthcare facility can use this concept to access advanced technologies such as radiology (Babic, Milosevic and Babic 146). Institutions that outsource new technologies find it easier to deal with competition and eventually deliver quality services to their clients. Outsourcing specific functions and activities makes it easier for firms to focus mainly on their core values (Guimaraes and Carvalho 142). A hospital will “achieve its goals without focusing on non-core business aspects” (Babic et al. 147). This project discusses the issues associated with outsourcing and teleradiology in healthcare.

Significance of the Study

In healthcare, outsourcing is undertaken to ensure more patients have access to various services that are expensive to deliver. This fact explains why fields such as nuclear medicine, oncology, radiology, and imaging have benefited a lot from outsourcing. This practice is usually undertaken by hospitals to reduce costs and deliver quality services to their patients. Outsourcing in healthcare can therefore take different shapes depending on the targeted objectives. Institutions can ensure their patients get timely medical support and treatment from third-party providers (Kremic et al. 471). As well, teleradiology has become a common practice because of the challenges affecting the healthcare sector. This new technology is embraced by many hospitals because it addresses the absence of specialized practitioners in radiology. Many healthcare practitioners are unable to offer adequate radiological services. This study will therefore outline the major advantages and advantages of outsourcing various medical technologies. The existing gaps and opportunities will also be highlighted in order to guide different healthcare facilities.

Conceptual Discussion

Several arguments are used to explain why healthcare institutions and companies outsource. As indicated earlier, outsourcing is a powerful approach towards reducing costs. For instance, a company can expand its operations without necessary incurring numerous costs. Hospitals can acquire specific products or services within purchasing expensive facilities. The second reason is that the process produces superior products. As well, the company can acquire new services and products within the shortest time possible. This scenario explains why healthcare facilities outsource specific services. Institutions can use this concept to access advanced technologies (Kremic et al. 474). Such institutions will find it easier to deal with competition and eventually deliver quality services to their clients. The purpose of this paper is to explain why outsourcing and teleradiology are critical fields in healthcare practice. The main argument is that outsourcing in healthcare is a practical strategy for minimizing costs and delivering quality support to patients.

Literature Review

Outsourcing

Outsourcing specific functions and practices makes it easier for firms to focus mainly on their core values (Kremic et al. 469). Such firms will “achieve their goals without necessarily focusing on different non-core business aspects” (Babic et al. 148). Institutions usually embrace the power of outsourcing depending on a number of situations. A specific service that might be costly to deliver to the targeted clients can be outsourced. As well, the outsourcing process should result in cost reductions. The absence of skilled personnel to complete a specific task encourages institutions to outsource. Activities that are “required but not embraced by many workers or stakeholders should also be outsourced” (Guimaraes and Carvalho 142).

Businesses and institutions cannot outsource every entrepreneurial function. Several considerations are critical whenever determining the major areas of outsourcing. For instance, technological services involving the use of radiology can be outsourced in order to reduce costs and offer exemplary services. The legal services required by an institution can also be outsourced. The firm can pay consultation fees and hire legal representatives. Firms can “outsource various operational aspects such as utilities, cleaning, product packaging, office supplies, and insurance” (Babic et al. 149). The targeted institution should therefore be aware of its goals before identifying the key areas and functions to be outsourced. Many firms also outsource recruitment services.

Outsourcing reduces time, manpower, and cost. Companies engaging in outsourcing remain flexible and profitable. Some technologies can be expensive to acquire. This situation makes outsourcing the best strategy towards getting specific services and products. Outsourced products tend to be superior in quality and can promote a company’s competitiveness (Babic et al. 148). This approach has also been observed to result in risk-sharing. Many companies and organizations embracing the practice reduce their operational costs by over 50 percent.

On the other hand, outsourcing has its share of drawbacks. Guimaraes and Carvalho believe that outsourcing can make it hard for business organizations to focus on the needs of their clients (143). The practice is also characterized by numerous bureaucracies such as contracts and laws. The third-party provider might delay the intended services. There are some hidden costs usually associated with the process. The practice also makes it easier for the outsourcing provider to acquire the company’s confidential data and information (Guimaraes and Carvalho 142). Any kind of negligence between the two parties can therefore result in information security threats. As well, the provider might not give the contract the attention it requires. These issues explain why businesses and firms should always identify the best outsourcing providers.

Outsourcing in Health Care

Some situations dictate when a hospital can outsource a specified service from a third-party provider. Some fields are characterized by high startup costs because of the technology equipment required. For instance, an institution providing oncology and dental services might not be able to afford the relevant medical equipment (Roberts et al. 3). That being the case, the hospital will outsource such services and ensure its clients receive the required medical support. Hospitals also embrace the concept when their machines or equipment fail to operate. Such equipment might take time to fix thus forcing the institution to outsource the required services (“Outsourcing in Healthcare” par. 1). This new field is making it easier for more patients to acquire appropriate services from different third-party providers.

Past studies indicate clearly that many hospitals are outsourcing a wide range of services in telemedicine and teleradiology. Such healthcare facilities have several arguments for engaging in these practices. The most important thing to understand is that healthcare businesses are not easy to expand. This is the case because the industry is characterized by expensive medical equipment and requirements (Guimaraes and Carvalho 146). The cost of equipment in telemedicine and teleradiology explain clearly why many institutions are unable to provide such services. However, some companies and facilities have emerged that have the potential to deliver some of these services. The unavailability of such healthcare services forces hospitals and facilities to outsource. Roberts et al. argue that “this new industry will deliver positive outcomes in the future because more patients will get adequate health support” (6).

Teleradiology

The current wave of technology-sharing has impacted the nature of medical practice. This fact explains why telemedicine has become a common field today. Teleradiology is therefore derived from the words radiology and telemedicine (Roberts et al. 4). Telemedicine is a field that focuses on the use of modern technological applications to transfer clinical data or information. Radiology, on the other hand, focuses on “the major technologies used in medicine to capture various body images for treatment or diagnosis” (Drnasin, Vucica and Tonkovic 73). Teleradiology is “a new field whereby such body images are collected and shared over a distance by medical practitioners in order to be interpreted for consultative or diagnostic purposes” (Drnasin et al. 73).

The absence of radiologists in many hospitals explains why this field has emerged. The emergence of this field makes it easier for institutions to share their images with different radiologists. The specialists acquire the image and make the relevant diagnoses (Drnasin et al. 73). They relay the information back to the hospital in order to undertake the required medical procedures. The ultimate purpose of this technology is to ensure a specialist is consulted even when there is a distance barrier.

Research Methodology

In order to get the best results, a number of articles were identified throughout the study. Several case studies detailing the benefits of outsourcing in healthcare were also studied (Roberts et al. 4). The targeted health institutions were in Russia, India, and the United States. A qualitative study was also undertaken by consulting different publications. This study presented new ideas that can support the importance of properly-managed outsourcing for various healthcare technologies.

Results and Discussions

This study has indicated that small clinics, upcoming healthcare centers, and hospitals are currently outsourcing a wide range of services. Laboratory services providers are also being outsourced. A small number of facilities have managed to purchase such equipment. This scenario has made it possible for different hospitals to collaborate with different facilities in an attempt to secure the best services for their patients. As well, some third-party companies are providing a wide range of services and technological support systems in order to improve the quality of care available to the targeted clients (“Outsourcing in Healthcare” par. 2). Large hospitals have been identifying new measures to purchase the required equipment. This move has continued to reshape the performance of the healthcare industry by ensuring that more people have access to superior health services.

Many healthcare institutions have managed to outsource different medical services. For example, Pushpanjali Crosslay Hospital in India has partnered with Galaxy Cancer Institute in order to provide quality services to its patients (“Outsourcing in Healthcare” par. 3). Mid Essex Hospital Services NHS Trust has also partnered with INVERTO in the area of Trauma and reconstructive orthopedics (Babic et al. 148). This outsourcing approach had reduced costs for the institutions while at the same time improving the quality of services availed to different clients. These success stories should encourage more institutions to consider the practice. The important thing is to be aware of the existing challenges and focus on the best strategies that can deliver positive results.

Outsourcing providers in healthcare have revolutionized the nature of care in different regions. However, outsourcing in healthcare has posed a number of threats and risks. For instance, third-party vendors are allowed to monitor and manage confidential information (“Outsourcing in Healthcare” par. 1). This means that the institution has shared patients’ information with different parties. The confidentiality of this information therefore depends on the integrity of the provider. The information shared by these two actors is usually confidential. Any malpractice can make the information accessible to other unauthorized people. This risk is a major challenge affecting the healthcare industry. The outsourced service provider might also fail to deliver exemplary care to the patient. This means that the targeted patients will not receive the intended care thus damaging the image of the institution. The transfer of responsibility from the institution to the provider also discourages more healthcare workers (Roberts et al. 6). This situation makes it hard for them to deliver quality care.

As well, teleradiology has emerged as one of the modern methods of outsourcing. Hospitals without competent radiologists can capture quality images and share them with different professionals. The high-resolution images are then transmitted to the consultant for appropriate analysis and diagnosis. The use of this technology makes it easier for hospitals to acquire scarce services from different professionals (Roberts et al. 5). Institutions embracing the power of teleradiology therefore have the potential to support the health needs of their patients. The medical practitioners in the institution also find it easier to focus on the other health issues affecting their patients. The implementation of this technology for a small hospital or healthcare facility can be costly. As well, competent technologists should be hired. Medical facilities and hospitals embracing the use of teleradiology can deliver quality services to their patients without incurring numerous expenses. This fact explains why more institutions will acquire the technology in the future.

A study conducted by the European Society of Radiology (ESR) in 2014 indicated that the use of teleradiology had brought numerous opportunities to many institutions (Badshah et al. 9). As well, more patients were able to receive timely healthcare services. Another study conducted in Russia indicated that the country had recorded positive outcomes after implementing the use of teleradiology. Similar accomplishments have been observed in the United States (Badshah et al. 12). The technology has devolved radiological services in the country. On the other hand, some tele-radiology programs have been unsuccessful. A similar project initiated in “the Limpopo Province in South Africa failed due to the complexities associated with tele-radiology” (Mohd-nor 90). The cost of the project was over 14 million pounds (Mohd-nor 92).

However, the field of teleradiology has been associated with a number of issues and risks. This happens to be the case because one party shares confidential information and images with another one. Any form of breach or system failure can jeopardize the privacy of the affected patients. This risk calls for proper policies in order to maintain the highest level of privacy. The “integrity of the radiologists working in the hospital also dictates the nature of risks facing the transferred images” (Drnasin et al. 74). These issues should therefore be considered in order to support the rights and needs of more clients.

Conclusions and Recommendations

Outsourcing is a complex process characterized by a number of disadvantages and advantages. That being the case, business organizations should be aware of certain advantages and bottlenecks before embracing the practice. This process is beneficial because it makes it possible for healthcare institutions to concentrate on their objectives (Roberts et al. 7). Healthcare facilities engaging in this practice should use various strategies to reduce these risks. For example, institutions should ensure the electronic information shared between the parties is secure. A contract should be signed between the provider and the hospital in order to reduce the anticipated risks. A “performance standard should also be used before signing the agreement” (Roberts et al. 4). The contract signed by the parties should have appropriate terms and conditions (Drnasin et al. 73). This approach will ensure the service provider embraces the best practices and focuses on the needs of every patient.

A hospital that plans to use teleradiology should consider various issues. The institution should begin by considering the appropriateness of its technological infrastructure. Such radiological images should be of the highest quality (Drnasin et al. 75). This means that the institution should have the required infrastructure before going to teleradiology. The hospital should also employ skilled personnel in order to use the infrastructure. The facility should also have the required quality assurance (QA) team. The role of this team is to monitor every activity and ensure the captured images meet the required criteria. As well, the hospital should make appropriate consultations with the selected radiological company. This knowledge will make it easier for the facility to acquire the right personnel and technologies before initiating the contract. The institution should also be able to address the health issues affecting the patients after the images have been analyzed. This means that the workers and caregivers in the hospital should be able to offer evidence-based care and support the clients. The service providers should possess the required expertise (Drnasin et al. 76). The most critical thing is to ensure every patient gets quality and timely support. A contract should also be signed in order to promote the highest level of confidentiality.

Teleradiology is a powerful practice that makes it possible for small healthcare institutions to offer quality services. This technology is a necessity for small hospitals with inadequate radiologists (Babic et al. 150). As well, the practice makes it possible for physicians to compare two or more interpretations. Radiologists can also offer their services to many patients in different parts of the world without having to travel. The field has also become a powerful educational device. The information and observations obtained from teleradiology can be used to improve different aspects of healthcare practice.

Some challenges have also been associated with this new field. For instance, billing issues and reimbursement problems have become critical aspects of teleradiology. Images requiring immediate interpretation might not receive the required attention. Some risks and privacy concerns have also surrounded the use of teleradiology. The “initial startup costs incurred whenever setting a teleradiology station make the services unavailable in different regions” (Drnasin et al. 74). In conclusion, experts argue that the continued use of teleradiology will ensure more diverse populations acquire the best services. This project shows conclusively that teleradiology is a promising field. Policymakers in healthcare should address the above bottlenecks in order to support the needs of more stakeholders.

Works Cited

Babic, Rade, Zoran Milosevic and Gordana Babic. “Teleradiology: Radiology at Distance.” Acta Facultatis Medicae Naissensis 29.3 (2012): 145-151. Print.

Badshah, Gran, Siau-Chuin Liew, Jasni Zain and Mushtaq Ali. “Watermarking of ultrasound medical images in teleradiology using compressed watermark.” Journal of Medical Imaging 3.1 (2016): 1-24. Print.

Drnasin, Ivan, Domagoj Vucica and Stanko Tonkovic. “Success of Teleradiology as a Confirmation of Radiological Excellence.” ITI 1.1 (2009): 73-77. Print.

Guimaraes, Cristina and Jose Carvalho. “Outsourcing in the Healthcare Sector: A State-of-the-Art Review.” Supply Chain Forum 12.1 (2011): 140-148. Print.

Kremic, Tibor, Oya Tukel and Walter Rom. “Outsourcing decision support: a survey of benefits, risks, and decision factors.” Supply Chain Management: An International Journal 11.6 (2006): 467-482. Print.

Mohd-nor, Rohaya. “Medical Imaging Trends and Implementation: Issues and Challenges for Developing Countries.” Journal of Health Informatics in Developing Countries 1.1 (2011): 89-98. Print.

Outsourcing in Healthcare 2011. Web.

Roberts, Jeremy, John Henderson, Larry Olive and Daniel Obaka. “A Review of Outsourcing of Services in Health Care Organizations.” IBIMA Publishing 1.3 (2013): 1-10. Print.

Demand for outsourcing among organizations especially in the field of information technology has increased rapidly. Organizations opt to outsource their activities to near-source and offshore outsourcing firms that have high experience in these processes and charge low for the services. With most of the American firms opting for near-source in Canada, Yan there are critics who are opposed to this move. According to these critics, there is a need for some of the currently outsourced services to be performed in the home country. This is due to the differences in process analysis among different countries. Currently, there is a potential for growth of Information technology in Canada with most organizations willing to outsource some of their processes in Canada. This has been due to advancements in IT industry in Canada. However, demand for some of the processes to be performed at home countries may have a negative impact on the Canadian It industry. There is the possibility of most organizations shifting from outsourcing their processes to training their employees. This will deny the industry numerous dollars it has been accruing from outsourcing (Schick para. 2).

An increase in the number of organizations outsourcing their processes to Canada has led to universities and colleges changing the way in which they used to teach information systems. Unlike in the past when students were only taught coding in computer science, currently, students have been motivated to taking more advanced projects. Rend in outsourcing has resulted in students being culturally indoctrinated. Currently, students are being taught different fields in IT which include programming and software development.

Due to differences in methods of process analysis among organizations, outsourcing all processes may result in errors in projects. This calls for some of the processes to be performed onshore. There are different processes that can be outsourced while others need to be done within the organization. Examples of information technology processes that can be outsourced include payroll processing activities, loan processing, and employee recruitment (Schick para. 3-5). This is because these processes are generally uniform in most organizations and do not require a lot of considerations. On the other hand, some of the IT functions that need to be managed onshore include organization management as well as Insurance claim processing. Different organizations have different management techniques. Outsourcing employee training and recruitment process may lead to organizations not getting employees with the required experience. Different countries have different regulations and considerations when it comes to processing insurance claims. Outsourcing these services may result in clients claiming more or less than what they deserve.

With the Canadian IT industry showing potential in its growth, it will act as a major source of employment to its citizens. Allowing It jobs to be processed offshore will hamper the growth of the industry. In return, most of the graduates coming from Universities will lack employment. There is a high need for the Canadian government to step in and stop the flow of Its jobs to other countries (Buckler pp. 23-31). To facilitate ensuring that jobs are processed onshore, the government needs to offer incentives to domestic outsourcing firms. This will help them charge a low cost for the services. In addition, the government needs to come up with strategies on how to train more people in information system fields. This will help in improving the quality of services offered by domestic firms. The government also needs to come up with measures to ensure that the country’s dollar does not scare people from outsourcing their services to domestic companies.

Works Cited

Buckler, Grant. “American outsourcing firms expands Halifax operation.” Computing Canada, 29.23 (2003): 23-31.

Schick, Shane.”The Opportunity cost of offshore.” ITBusiness.ca. February 2004. Web.