Page 132 - F1 - AB Integrated Workbook STUDENT 2018-19

Chapter 8

3.3 Outsourcing

Outsourcing means contracting out aspects of the work of the
organisation, previously done in-house, to specialist providers.

There are four key types of outsourcing:

 Total – where the third-party supplier provides most or all of the organisation’s
IT systems and services

 Ad-hoc – when the organisation needs IT support for a short period and hires in
external support as needed on a temporary basis

 Partial – where some IT functions are outsourced, such as maintenance or
support, but others are kept in-house

 Project management – similar to ad-hoc, this occurs when the creation and/or
implementation of a specific IT system are outsourced to a third party supplier

Advantages Disadvantages

 Supplier may have specialist  May be difficult to bring IT back
skills that the organisation in-house at a later date, as may
lacks lose staff with specialist
knowledge from the organisation
 May operate on a fixed fee
contract, removing uncertainty  May lead to being locked into an
surrounding IT fees for the year unfavourable contract with a poor

quality supplier
 May improve business
flexibility, allowing variation of  Will allow third-party supplier
the level of work the supplier access to the organisation’s
performs information, which may risk data
security breaches
 The supplier may be more
efficient at running the IT  By relying on a third party for its
function, leading to cost IT, the organisation will have no
savings way to create its own, unique
systems. This means it cannot
obtain competitive advantage
from its systems

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