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3 pages/β‰ˆ825 words
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APA
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Business & Marketing
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Research Paper
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English (U.S.)
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Topic:

Subnetting Networks: Outsourcing

Research Paper Instructions:

FINANCING ORGANIZATIONAL TECHNOLOGY
Assignment Overview
In recent years many companies chose to at least partially outsource their IT operations. They are of the opinion that the IT is not the core competence of the company and outsiders who will undertake to provide the IT operation as outside contractors will do a better, and possibly cheaper job.
The financial manager must be able to assess the wisdom of the investment in technology, and in particular in IT, from the viewpoint of the shareholders. The basic question that one must try to answer is: would an investment in technology and IT raise the value of the shares and increase the wealth of the owners of the company - the shareholders? Would an outsourcing be more beneficial? Should the company lease (or outsource) these technologies or should it invest in developing new technologies? What impact would these decisions have on shareholders value?
In this module we will be considering this investment decision with reference to IT outsourcing and its relation to capital budgeting and risk. Please review at least in overall terms the following documents relating to IT outsourcing:
Thor Olavsrud (2011). IT Outsourcing. Datamation. Retrieved from http://itmanagement(dot)earthweb(dot)com/career/article.php/3875026/IT-Outsourcing.htm#IT_Outsourcing_Pros_and_Cons.
James Bucki (2011). Introduction to Outsourcing. About.com. Retrieved from http://operationstech(dot)about(dot)com/od/costsavingstrategies/a/OutSrcDefine.htm
James Bucki (2011). Top 7 Outsourcing Advantages. About.com. Retrieved from http://operationstech(dot)about(dot)com/od/officestaffingandmanagem/a/OutSrcAdvantg.htm
James Bucki (2011). Top 6 Outsourcing Disadvantages. About.com. Retrieved from http://operationstech(dot)about(dot)com/od/outsourcing/tp/OutSrcDisadv.htm
F. John Reh (2011). Offshoring - Outsourcing to Extreme. About.com. Retrieved from http://management(dot)about(dot)com/cs/people/a/offshoring104.htm
Dhanya Ann Thoppil (2011). IT Firms Split on Outsourcing Demand for 2011. IndiaRealTime. Retrieved from http://blogs(dot)wsj(dot)com/indiarealtime/2011/02/17/on-outsourcing-demand-for-2011-indian-it-is-split/
Also read these document discussing managerial decision-making concerning return on investment, capital budgeting and risk.
Cresswell AM. Return on Investment In Information Technology: A Guide for Managers Retrieved Sept. 23, 2007 from http://www(dot)ctg(dot)albany(dot)edu/publications/guides/roi
Graham J and Campbell H (2002) How Do CFOs Make Capital Budgeting And Capital Structure Decisions? Journal of Applied Corporate Finance. Retrieved Sept. 23, 2007 from http://faculty(dot)fuqua(dot)duke(dot)edu/~jgraham/website/SurveyJACF.pdf
Case Assignment
The background information has further material on using financial data to assess risks and comparatively evaluate the future possibilities for companies. In addition, you may wish to seek out further information through your own research. When you have reviewed the advice and the plans. please prepare a short (3-5 page) paper discussing:
Agree or disagree: Standard financial investment information and criteria are all that is needed to effectively evaluate IT outsourcing decisions. (When evaluating the options be sure to compare debt vs. equity)
Please carefully explain your reasoning, with reference to the appropriate financial and other information.
Assignment Expectations
Use information from the modular background readings as well as any good quality resource you can find. Please cite all sources and provide a reference list at the end of your paper.
LENGTH: 3-5 pages typed and double-spaced.
The following items will be assessed in particular:
Your ability to demonstrate your understanding of the role of financial information in IT outsourcing decisions;
Your ability to demonstrate your understanding of the advantages and disadvantages of debt and equity options.
Some in-text references to modular background readings.

Research Paper Sample Content Preview:

Outsourcing
Name:
Institution:
Introduction
Information technology has become one of the most crucial of business in the recent years. Most of the companies have data to manage and online platforms that they need to stream line across platforms. As such, given that the aspect of investing in IT can be quite tasking especially when considering that the company is specializing in other aspects. It is for this reason that the most of the companies opt to outsource the IT services (F. John, 2011). Furthermore, IT firms only specialize on IT and thus their level of skills is much higher and the resources that they are going to use will be minimal. In most of the cases, having an internal IT department working on some of the major projects can turn out to be quite expensive, however for the outsources companies the work is guaranteed to be quality and may cost cheaper.
Current trends
Most of the firms across the industries negotiate contracts with IT firms in reference to carrying out standards and project oriented Information systems management. Ideally, most firms run more than one information systems with the different departments, these terminals are then combines onto one platform such that the different persons in the firm and the stakeholders can access the information from either department whenever they need it. Cost of investment is most crucial issues that continue to dictate and predicate the need to invest in IT services. It is common for software development to continue to decrease even if the economy is growing.
Debate
Standard financial investment information and criteria are not all that is needed to effectively evaluate IT outsourcing decisions.The benefits that come with outsourcing are far reaching than financial information would easily elaborate on for the key decision to be made. Basing such immense decisions on the financial information alone would be too narrow (James, 2011).
Some of the aspects that are financially related and can affect the decision to be taken with reference IT outsourcing include the costs. Where services in IT are outsourced, the costs shift from the fixed state to the variable costs (Graham &Campbell, 2002). This is an advantage, given that companies are able to make flexible adjustments to the budgetary allocations, meaning that the costs allocations are only increased where need be. The aspect of outsourcing also brings about reduced costs on labor. Basically, one of the aspects that are quite expensive to any company is that of hiring and training. Some of the temporary employees that are given the job do not live up to the expectations leading to even higher costs and poorer quality. However, if a company hires an IT firm, they are assured of quality given the level of specialization and it is going to cost the company much less to finish an IT projects and maintain them. As such the company can then concentrate on the human resources with much ease. This also brings in the idea of qualification and certification of the IT specialists at the firm (Thor, 2011).
While there as many financial aspects that have to be considered before making an investment in IT outsourcing, these are not the only aspects that have subtle implications. Certification in IT can...
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