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Why outsourcing
“ Outsourcing or subcontracting in its original definition is the process of transferring non-core company processes to third parties , which allow companies to dedicate themselves to the core functions of the business ; those that add value to the company and its customers . "
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• Aspects
to take into account in outsourcing
Contractual concepts of outsourcing
In this section, we will see what an outsourcing contract should have in general terms and what it should cover.
A contract is a legal document that includes the scope and
characteristics of the outsourcing service. The outsourcing contract must
define the following aspects:
1. Duration : time in which the service will be provided or
the subcontracting will last.
2. SLA : the service levels, the parameters in which the
service will be offered.
3. Service recovery plan: plan that defines how the service
will be returned once the contract has ended. In the service recovery plan,
also known as “scheduled departure”, it should be considered:
• When the
service is to be returned.
• The
possibility of early cancellation of the contract with its corresponding
financial compensation.
• The
notice periods for cancellation of the contract or termination of the service.
• The service
recovery plan is a clause that must appear in the contract.
4. Intellectual property : the contract must clearly define
who owns all the development needs to perform the service, the client must
clearly establish who owns the development.
5. Contract cancellation clauses : parameters for the
breaking of the contract, both by the client and by the supplier and financial
and even criminal compensation for the breaking of the contract.
6. Service level parameters : the service level defines the
scope of the service (communications, systems, infrastructure, application
development, etc.) for specific information systems, and the exact way to carry
it out. It is one of the most important points of an outsourcing contract and
it must be easily measurable. The level of service must contemplate:
• Feasibility
analysis : defining the scope of application.
• Agreement
analysis : detail that determines each and every one of the specific
commitments contracted by the parties.
7. Assets : the set of resources, both physical and logical,
that are owned by the client and that will be transferred to the company that
provides the service; At all times, these resources will be the property of the
client and are only transferred so that the service can be offered. These assets
can be classified into:
• Physical
: the physical resources of the company, usually equipment, rack servers,
routers, etc.
• Logical :
operating systems, software, databases (with the payment of their licenses per
day).
• Company
information: information that the provider needs to be able to provide the
service; it may have software or hardware.
• Human :
personnel supplied by the customer to the supplier to provide the service, many
times these resources become part of the supplier's payroll.
8. Payment plan : it is established how the payments for the
service will be made. It usually has a fixed part that is the one in the
contractual part, provided that the provisions of the contract have been
fulfilled, without there having been penalties, and another variable part for
extra work that is paid apart from what is stipulated in the contract.
It is in the variable parts where the manager that controls
the service must pay special care, since most of the deviations that exist in
the information systems services are in jobs not stipulated in the fixed part.
If there are jobs in the variable part that become recurring, it is recommended
that this part of variable jobs must always have the approval of those
responsible by the client.
9. Facilities management : the service that aims to carry
out the tasks of a Data Processing Center (DPC) of an organization, consisting
basically of: IS operation, network management and technical support.
10. Service location : this service can be provided remotely
from the facilities of the contracted company or those of the contracting
organization and the resources to be used may belong to the contracted company,
the contracting organization or the supplier of the software or physical being
used. The concept of facilities management is generally confused with
outsourcing, although the latter is broader and encompasses it.
11. Systems management : a service of greater scope than
facilities management, consisting of: IS operation, network management,
technical support and application maintenance.
12. Systems integration : a service that contemplates the
development and implementation of an organization's applications and whose
scope includes all the tasks related to an IS development project: design,
coding, testing, user training and implementation of YES.
Why outsourcing?
Outsourcing comes from the English words: out and sourcing,
out is out and sourcing: it is the act by which we transfer work,
responsibilities and decision-making to someone.
The reason why companies outsource is because of the value
contribution that specialized companies make. A company that is dedicated to
selling water pumps, does not contribute anything to maintain the services of
telephone and network communications; at the hardware and software level, it is
much more profitable for them to hire a specialized company to cover this
service, so they only care about selling water pumps.
But who decides to outsource? Normally the decision comes
from the management committee, driven by a member of the committee, be it the
CEO, CFO, IT Director, etc.
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