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Outsourcing: Justification & Concerns

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Identify the reasons why companies outsource

Some of the reasons companies outsource are: "to access skills and technologies, to reduce both fixed and recurrent costs, to allow the organization to focus on its core business, to provide flexibility and to increase accountability" (Schwalbe, 2014, p.481-482). "The shortage of qualified personnel, not cost savings, this is the top reason for global outsourcing of IT services" (Schwalbe, 2014, p. 481). When outsourcing it allows businesses to focus on their core function and not have to deal with the aspect that is being outsourced. Extra staff during periods of peak workloads is another benefit of outsourcing.

Explain, giving two examples, how you would balance cost reduction and quality maintenance while outsourcing.

Different types of contracts, including fixed-price, cost-reimbursable, and time and material contracts, should be used to manage the risk that an organization takes when outsourcing project requirements.

A business should fully understand the capabilities of an organization they are going to outsource a project to. Just because a company offers the lowest price, doesn't mean they will be able to deliver the quality needed and/or expected. Researching a company's past experience and product delivery can be tedious, but beneficial in the long run.

Identify, with three examples, the measures you would take to ensure protection of strategic and confidential information while outsourcing.

To ensure protection from strategic and confidential information I would ensure the all my employees where well trained in knowing who had or has access to confidential information.

Protecting the organization from risks associated with confidentiality is important to minimize the type and volume of data third parties are handling, and minimize access as much as possible.

"Suppliers should be visited regularly to see security and data protection controls, in most IT projects some form of PII is handled as well as proprietary information that if release to a competitor could cripple an organization" (Deloitte, 2012).


Deloitte. (2012, July 10). 4 IT Outsourcing Risks and How to Mitigate Them. Retrieved from http://deloitte.wsj.com/cio/2012/07/10/it-outsourcing-4-serious-risks-and-ways-to-mitigate-them/

Schwalbe, K. (2014). Information technology project management (7th ed.). Boston, MA: Cengage Learning.

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Solution Preview

Outsourcing is often used as a way to cut costs by getting jobs done through cheaper labor (Wheelen & Hunger, 2010). As the post points out, outsourcing can also be used if there is a shortage of qualified labor. Organizations may have a great idea for a product but lack the abilities in house to manufacture it, utilizing their current labor force. It is often more cost efficient to utilize other sources of labor that are experts in the field and have the advantage of economy of scale or ...

Solution Summary

This solution responds to a post explaining why a organization would outsource and examples. Also, discusses measures that might be taken to ensure security. Includes formatted reference.