IS3321 Information Systems Solutions
for the Digital Enterprise
Lecture 3: Outsourcing and Virtual Teams
Rob Gleasure
R.Gleasure@ucc.ie
robgleasure.com
IS3321
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Last session
 Introduction to big data
 The 3 V’s of big data
 The Internet of Things
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This session
 Outsourcing
 Advantages and disadvantages of outsourcing
 Virtual teams
 Advantages and disadvantages of virtual teams
What is Outsourcing?
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“The strategic use of outside resources to perform activities
traditionally handled by internal staff and resources” Dave Griffiths
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Internal functions performed by an outside firm
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Standard practices in many areas mean that certain functions can
be pushed outside of the organisational boundary
Why Would We Outsource?
In essence, it allows us to reduce the resources dedicated to a
function or service to the bare minimum by only paying for them as
we need them
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What does this remind you of?
Resources
Capacity
Demand
Resources
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Capacity
Demand
Time
Static data center
Time
Data center in the cloud
Slide Credits: Berkeley RAD Lab
Why Would We Outsource?
Different Forms of Outsourcing
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Outsourcing can take place in several forms
1.
Information Technology Outsourcing (ITO)
 Companies are forced to adapt to constantly changing
technologies, updated platforms, new standards, etc.
 Some companies may feel that managing these changes does
not add sufficient value to make it cost-efficient
 External specialised parties offer to take on this responsibility for
a firm, delivering them only the IT they need, e.g. Xerox
Different Forms of Outsourcing
2.
Business Process Outsourcing (BPO)
 Operational functions are entrusted to a third party
 This can include front office tasks, e.g. customer relations
management, marketing, technical support
 This can also include back office tasks, e.g. accounting, human
resources, logistics, procurement, security, documentation,
insurance, and manufacturing,
 Arguably the most popular form of outsourcing at present
Different Forms of Outsourcing
3.
Knowledge Process Outsourcing (KPO)
 Core value-adding information-related business activities are
entrusted to a third party
 Examples include business/market/product research, legal
services and patenting, training, product and service design, etc.
 Unlike BPO, outsourced firms are given managerial control of
these activities, not just a list of processes to be implemented,
e.g. KPMG
Different Forms of Outsourcing
Knowledge Process
Outsourcing
Core
business
value
proposition
Business Process
Outsourcing
Information Technology
Outsourcing
Advantages of Outsourcing
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Saves time and money
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Allows complex aspects of business to be handled by those with the
necessary expertise
 Incorporation of best practices
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Lets businesses focus on specific areas where they may feel most
capable
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Pushes risk out to third parties
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Drags many aspects of organisation towards industry standard
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Exposes organisation to excellence in troublesome domains?
Disadvantages of Outsourcing
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Loss of control over issues of quality, public image
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What if the third party goes under?
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Hidden costs and potential for misunderstanding
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Issues of security and confidentiality
 Involuntary innovation sharing
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Loss of knowledge and diversity inside organisation
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Outsourcing of accountability?
 https://www.youtube.com/watch?v=Qb7DKWk-Jlc
Virtual Teams vs. Outsourcing
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Increase in technological standardisation, bandwidth, etc. also
means team members may be assembled from geographically
dispersed specialists to create temporary remote teams
Image from http://www.itd.com/virtual-teamworking-training/
Managing Virtual Teams
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Virtual Teams may coordinate their activities in a number of ways
 Video/audio conferencing
 Emails/voice mails
 Shared databases/repositories
 Remote desktop sharing/virtual machines
 Site visits
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Reports are also produced continuously to coordinate team with
management
Advantages of Virtual Teams
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Allows a range of sites to share specialist expertise
 Exploitation of scale
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Allows individual workers to collaborate and learn from those with
high levels of knowledge
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Saves time and cost of looking for people when non-routine needs
emerge
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Encourages appreciation of diversity
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Allows shared organisational goals to be maintained
Disadvantages of Virtual Teams
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Relationship building in a team is difficult
 Trust is harder to develop when people interact with different
people all the time
 Cultural differences
 Misunderstandings get more frequent as communication media
becomes leaner
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Non-parallel work days
 What if I need something urgently but my teammate’s work day is
already over?
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Brainstorming is made challenging when individuals’ feedback is
delayed
Disadvantages of Virtual Teams
(continued)
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Competition between units may create strain in terms of how
projects are implemented
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Everyone always wants the good people at their station working on
something  talent greed
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Accountability over specific goals can be vague
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Decreased build-up of Tacit knowledge
Next Session
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The wisdom of crowds and an introduction to crowdsourcing
Readings
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https://bpophilippinesoutsourcing.wordpress.com/2013/06/14/bpovs-kpo-five-basic-differences/
https://www.kpmg.com/LU/en/IssuesAndInsights/Articlespublications
/Documents/Knowledge-Process-Outsourcing.pdf
http://blog.hubstaff.com/remote-team-management/