Outsourcing and on-Demand Computing

Outsourcing and On-Demand Computing

by Beryl Morgan
November 4, 2007 Outsourcing and on-demand computing are two of the fastest emerging business tactics in the industry today. In outsourcing, businesses contract out certain services to an outside provider or manufacturer, often overseas. On-demand computing is similar to outsourcing only here businesses contract out their computing resources, such as computation and storage, rather than an actual business services. The computing is tracked as a metered service, similar to physical public utility such as electricity, water, natural gas, or telephone network. In either case, some piece of the company is broken off and run by an outside source. “Organizations can outsource any aspect of their information system, including hardware maintenance and management, software development, database systems, networks and telecommunications, Internet and intranet operations, hiring and staffing, and the development of procedures and rules regarding the information system” (Stair, 348). For the most part, outsourcing and on-demand computing have had a positive financial impact on US businesses. They are able to “reduce costs, obtain state-of-the art technology, eliminate staffing and personnel problems, and increase technological flexibility” (Stair, 348). However, from a consumer standpoint, there has been much controversy over these tactics. For example, many believe that by outsourcing services to foreign companies for cheaper rates, businesses are damaging the local labor markets. Often times there are language barriers making communication difficult between consumers and foreign workers conducting companies’ services. Staff “turnover is higher under an outsourcer and key company skills may be lost with retention outside of the control of the company” (http://en.wikipedia.org/wiki/Outsourcing). Qualifications of outsourced staff are often well under those of actual business employees and because they haven’t been trained under the original company, they also often lack company knowledge and fail to realize the business’s values. All of these factors can be very frustrating for a consumer trying to conduct unfinished business with a company whom they have already finalized a purchase with. I speak from experience when I say this as well. I purchased a laptop computer from Dell in December of 2006 and was sent a defective mouse. I have YET to be issued a correctly working, adaptable piece of equipment and have spent HOURS on the phone with their ‘customer service’ representatives who are based in India and barely speak English. The connections are horrible, we can’t understand each other, I have never spoken with the same representative, and have been told something different every time I have called. Because of this experience alone, I will never again purchase anything from Dell and have started asking companies if their services are outsourced before making purchases from them. So in discussing the impact outsourcing and on-demand computing are having on the economy, I think the effects are positive for the businesses up front, but I think if this trend continues, organizations may start to lose clients who, like myself, have become extremely frustrated in dealing with outsourced services. On the flip side of that, if the trend continues and more companies get on board with these tactics, this may be the way of business in the future. I certainly hope not though!
REFERENCES

Stair, Ralph and George Reynolds. Fundamentals of Information Systems. Canada: Thomson Learning, 2008.
“Outsourcing”. Wikipedia: The Free Encyclopedia. 2007. http://en.wikipedia.org/wiki/Outsourcing.

References: Stair, Ralph and George Reynolds. Fundamentals of Information Systems. Canada: Thomson Learning, 2008. “Outsourcing”. Wikipedia: The Free Encyclopedia. 2007. http://en.wikipedia.org/wiki/Outsourcing.