Outsourcing in organisations: A new management reality

Outsourcing has become a major component of globalization and information technology strategy in many companies around the world. From the early 1990s to the present, the reality of sourcing has varied significantly, an example being the services that organizations typically choose to transfer to external providers, which are now different from those of one or two decades ago. This paper explores outsourcing in organizations: a new management reality. It explores this proposition using an exploratory analysis. The paper formulates the modes of outsourcing and the drivers of outsourcing which could contribute to better organizational performance. It demonstrates that when used correctly outsourcing can deliver benefits such as cost reductions, enhanced skills capabilities, shifting technology risks, ability to focus on core business competencies, improved quality and competitive advantages. However, while outsourcing partnerships offer many benefits, there are also concerns and potential challenges which include among others; employees reacting badly to outsourcing, data theft and security concerns, cultural differences between client and vendor organizations – all of which must be taking into cognizance by managers and must adapt to new realities. Based on these challenges some recommendations were made; communication should be established with fearful employees to ensure they understood their roles and are properly compensated to stay through the outsourcing initiative, and that outsourcing vendor candidates must have a proven track record of maintaining strong security programmes at their locations and should have procedures to protect intellectual property.