25.2 IT Procurement Outsourcing: Risks and Rewards

	The Decision whether to outsource or not, how to outsource and what to outsource is not an easy one to take.
	The bottom line is that any organization considering outsourcing needs to understand how the outsourcing business proposition maps to their specific needs and evaluate all risks to be avoided and rewards to be gained involved in the process.
	Risks involved in outsourcing IT functions include the following:

		Some IT functions are not easily outsourced hence the client organization should make sure that the outside vendor is qualified to take care of your greatest needs.
		Control may be lost some critics argue that an outside vendor will never be as effective as a full-time employee.

			Additionally the confidentiality of data and disaster recovery will be compromised.
			However, a supervisor that is knowledgeable in managing an IT staff member will usually be required.

		Employee morale may be affected especially if the job functions of the employees are replaced by an outsourced firm.
		The organization may get locked in especially if the vendor does not document the work on the organization's network and system.

25.2 IT Procurement Outsourcing: Risks and Rewards

Rewards to be gained through outsourcing IT functions include the following:

		Keeping up-to-date with the latest in technology given the rapid software and hardware development in this industry.
		Cost savings: outsourcing IT services provides financial benefits such as reduced overhead, bulk purchasing as well as leasing options for hardware and software, and software licenses
		High quality of staff: outsourced IT vendors tend to hire staff with specific qualifications and certifications as it is their core competency.

	Flexibility as vendors typically has multiple resources available to them compared to limited resources available internally for the organization staff.
	Job security and burnout reduction for regular employees.

Using an outsourced IT vendor reduces the extra burden from staff whom are doing more than what they were hired for.

Highlighting the risks and rewards associated with IT outsourcing it has become clear that it is essential to successfully manage the working relationships with IT vendors (service providers). Some points to consider are as follows:

Communicate the goals and objectives of the project clearly with the IT vendor.

25.2 IT Procurement Outsourcing: Risks and Rewards

		Have a clear strategic vision and plan for the project.
		Select the right vendor or new hire proper IT vendors based upon thorough research.
		Develop a contract stating clearly all the expectations of the relationship, especially the financial aspect.
		Keep open communication with all stakeholders