Focusing On Implementation Of Outsourcing Strategies Essay

Question:

Discuss about the current assignment indicates that several companies in global IT sector are focusing on implementation of outsourcing strategies?

Answer:

Introduction:

The organization in global market is tending to conduct their activities at lower cost and also within less time. Use of outsourcing strategies reduces complexity of organizational processes. Often the organizations tend to outsource their noncore activities to execute those activities more efficiently. However, high dependence on outsourcing activities also affects performance of the organization. Google is one of the largest organizations in international IT and software development industry. The organization develops several advanced products including search engines, customized search services, YouTube, Gmail etc (Google.co.uk, 2015). However management of the organization also gives importance on regular up gradation of these products. The current research deals with analysis on the outsourcing strategies of Google. The risks associated with outsourcing strategies are also discussed in this assignment.

Logic map for outsourcing:

Although the companies working in global IT sector emphasizes on out sourcing some of their activities to external companies, the decisions are impacted by presence of external and internal factors (Lacity and Willcocks, 2014). Discussion on the process of strategy development at Google indicates that the management focuses on impact of any activity on performance of the organization before involving external service providers to the tasks. Utilization of outsourcing strategies enables an organization to improve efficiency of the processes. However impacts of outsourcing strategies on future performance of the organization also need to be analyzed before implementing such strategies.

Figure 1: Logic map for outsourcing

Google offers several advanced products and services to its customers. It reflects that the activities related with development and up gradation of these products is complex. However management of Google can outsource some of its activities to other organizations for reducing time and cost of executing the tasks (Malik, Sinha and Blumenfeld, 2012). As competition in software development industry is increasing, Google gives importance on launching new and innovative products in market. Introduction of new products enable the organizations to remain competitive in market. It needs to be ensured that implementation of outsourcing strategies are not affecting uniqueness of the products offered by Google. Impacts of the activities, which are going to be outsourced, are also assessed before implementing the strategies.

The activities related with designing new products are being conducted for entering into new markets (Narayanan et al., 2011). However development of these products requires utilization of advanced technology. The management of Google also needs to invest large amount of capital in order to design new products. Developing strategic alliances with other organizations will enable management of Google to execute the tasks related with new product development in lower cost.

Use of in- house expertise for development of existing products will be effective to maintain quality of the products (Smith, 2009). However maintenance and up gradation of some products related with social media and advertisement can be out sourced. As these products are less complex, involving other organizations for maintenance and up gradation of these activities may increase cost and time efficiency.

Performance indicators for implementing outsourcing strategies:

Although management of the organization, Google emphasizes on outsourcing of few noncore activities, management of the organization also gives importance on ensuring quality of the services as well as products is not degraded due to implementation of such strategies (Wang and Zhou, 2013). Managements of different organizations in global IT sector are focusing on reduction of time needed to complete a task. This tendency of organizations for implementing outsourcing strategies is increasing. Reliability of outsourcing service providers needs to be analyzed prior to implementation of such strategies in order to avoid any degradation in quality of products and services. The discussion reflects that organizations focus on quality, time and cost required for execution of tasks prior to implementation of these outsourcing techniques. The management of Google also emphasizes on assessing reputation as well as trustworthiness of the external service providers before outsourcing its activities to these organizations.

Quality: Quality of products as well as services which are offered by organization can be considered as one of the most important factors while implementing outsourcing techniques (Abadli and Otmani, 2014). Maintenance of quality of the products and services enables the organization to enhance customer satisfaction (Franch and Soffer, 2013). Management of the organization also needs to give importance on reduction of the errors while conducting operational tasks for improving improve quality of the products offered by it. It reflects that the companies which are focusing on implementation of outsourcing strategies need to ensure that the service provider has the competencies to execute these tasks without degrading quality. The tasks related with development and maintenance of unique products of Google will not be outsourced. It will reduce the chances of quality degradation. However marketing activities are outsourced as it enables Google management to utilize external expertise.

Speed: Discussion on trends of global IT outsourcing industry reflects that the companies will be able to execute a task in less time due to utilization of outsourcing techniques. The organizations working in global IT sector requires responding to the consumers within less time (Adriaan Boermans and Roelfsema, 2013; Uesugi, 2013). It indicates that they need to complete their tasks within less time. The ability of providing fast services to consumers improves their level of satisfaction. However the organizations also get the chances for increasing price of the offered products and services if they become able to provide the consumers with faster services. Managements of the organizations which operate in IT industry show the tendency of outsourcing some noncore activities. It is evident that implementation of outsourcing strategies enables the organizations to finish tasks within shorter time. Outsourcing the activities related with advertisement, promotion and maintenance of social media products will enable Google to offer faster services to the consumers.

Cost: Utilization of outsourcing techniques is not only beneficial for reduction of time; these strategies are also effective to make the processes simpler (Derksen, 2013). Implementation of the outsourcing strategies will be beneficial for reduction of the costs. If the management of Google creates strategic partnerships with other companies of global software industry, the organization will become able to share expertise, knowledge and infrastructure of the partners. As an impact, quality of the products offered by the organization can be improved significantly without investment of large capital (Malik, Sinha and Blumenfeld, 2012). The management of Google also can outsource its marketing activities to other organizations. Outsourcing the marketing activities will be beneficial for avoiding increase of costs required for conducting advertisements as well as other promotional tasks.

Analysis on the outsourcing strategies indicates that the new products can be designed in collaboration with other organizations. It will enable the management to reduce cost required for infrastructure installation. Development of strategic alliances will also reduce requirement for investing capital. The activities such as advertisement and promotion can be outsourced to reduce cost.

Reliability of outsourcing service providers: Although the management of Google focuses on involving other companies to complete the tasks, analyzing reliability of the outsourcing service providers is also important for avoiding degradation in quality (Brcar, 2011). However management of Google also can ensure that only non core activities are being outsourced. It will reduce the chances of quality degradation. As Google is known for providing advanced products, the management needs to analyze reliability and reputation of the out sourcing service providers so that quality of products and services do not degrade.

Flexibility: With increasing availability of technology, organizations which are doing business in global IT sector, need to change their operational activities rapidly (Obuba, 2013). As competition in global IT and software industry is increasing, the management is also implementing innovation in the operational activities in order to execute those tasks more efficiently. Extensive dependence on out sourcing activities may restrict Google from implementing innovation. It may also affect ability of the organization to adopt change.

Evaluation of risks:

Analysis on the outsourcing activities indicates that implementation of such strategies is important for improving efficiency of operational activities. However, several risks are associated with these outsourcing strategies. Extensive focus on implementation of such strategies may increase dependence on its partners. Outsourcing of some activities also may affect quality of services and products offered by the company. Ineffective selection of out sourcing service providers may also impact on reputation of the client organizations.

Likelihood

Consequences

Insignificant

Minor

Moderate

Major

Almost certain

­-

-

-

Dependence on partners

(Extreme Impact)

Likely

-

-

-

Lack of focus on Research and development activities

(Extreme Impact)

Moderate

-

-

-

· Degraded quality of products

· Ineffective selection of outsourcing service providers

(Extreme Impact)


Table 1: Risk Evaluation Matrix

Analysis on the risks associated with implementation of the outsourcing strategies indicates that all the risks can affect performance of the organization severely. Too much dependence on involving external organization to conduct operational activities may restrict the organization to upgrade its existing infrastructure (Retov? and P?lya, 2011). It may affect long term performance of the organization. Less focus on conducting the research and development activities can restrict the organization from introducing innovative products. If the client organization does not give importance on assessing reliability of the outsourcing service providers, brand image of the client organization also can be affected due to activities of outsourcing service providers. It will also affect long term performance of Google.

Mitigation strategies:

Communication with employees: Often implementation of outsourcing strategies leads to degradation of productivity of employees. Management of Google needs to ensure that all staffs are informed about the outsourcing strategies. Scope of the activities conducted by outsourcing service provider will also be specified to the employees. Regular communication with staff on outsourcing strategies will enable the organization to avoid loss of productivity of the staffs.

Developing long term relationship with multiple service providers: The management of Google can give importance on involving multiple stakeholders to the organizational activities. It will be effective for utilizing expertise and knowledge available in different organizations. It will reduce the chances of quality degradation. The management of Google also can give importance on creating long term relationship with the outsourcing service providers. It will be effective to developing trusted relationship with the outsourcing partners.

Use of decision support system for implementation of outsourcing strategies: The management of Google can use applications of management information system such as decision support system to assess the out sourcing strategies. It will enable the organization to identify risks associated with these strategies before implementing these. As an impact, the negative effects of out sourcing strategies can be eliminated.

Conclusion:

Discussion in the current assignment indicates that several companies in global IT sector are focusing on implementation of outsourcing strategies. Although the organizations use this strategy to reduce cost, often implementation of outsourcing strategies may lead to degradation of product quality. It may also reduce productivity of employees. The ability of workforce to adjust with new processes can also be affected due to implementation of outsourcing strategies. The management of Google gives importance on introduction of new products in market. Extensive focus on outsourcing strategies may reduce efficiency of research and development activities of the organization. This can impact on long term performance of the organization. On other hand, products of Google are highly advanced. It indicates that outsourcing activities related with development and up gradation of these products can affect quality. It also can affect performance of the organization. Analysis in the assignment also reflects that management of Google can outsource tasks related with promotion and advertisement. It will reduce complexity of organizational processes and also will be effective to execute these activities more efficiently.

References

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Adriaan Boermans, M. and Roelfsema, H. (2013). The effects of managerial capabilities on export, FDI and innovation: Evidence from Indian firms. Asian Business & Management, 12(4), pp.387-408.

Brcar, F. (2011). The Perspective of Business Process Outsourcing in Slovenian Organizations. Organizacija, 44(4).

Derksen, B. (2013). Impact of IT outsourcing on business & IT alignment. s.n.

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Google.co.uk, (2015). About Google - Products. [online] Available at: [Accessed 23 Jul. 2015].

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