1. 3.12 External and Internal Resources

3. 1. What do we mean by outsourcing?
2. What do we mean by offshoring?
3. What services might companies ‘outsource’ or ‘offshore’
4. What reasons are there for outsourcing?
5. What business reasons are there for offshoring?
6. What customer/business issues arise with offshoring?
7. What do we mean by rightshoring?
8. What social and ethical issues arise with offshoring?
9. What are the overall benefits and limitations of
offshoring?
10. There are a number of different ways in which
organisations can obtain external services from
suppliers or service companies. State these 3 ways.

4. 11. What are the company benefits and drawbacks of buying
hardware, software and equipment?
12. What are the company benefits and drawbacks of contracting
people, work space and equipment?
13. What are the company benefits and drawbacks of leasing
software, communication links and equipment?
14. What 6 internal resources need to be managed by organisations?
15. What issues should be considered with regards to People (as a
resource)?
16. What issues should be considered with regards to Hardware (as a
resource)?
17. What issues should be considered with regards to Software (as a
resource)?
18. What issues should be considered with regards to Communication (as
a resource)?
19. What issues should be considered with regards to Consumables (as a
resource)?
20. What issues should be considered with regards to Facilities and Power
(as resources)?

5.  Transfer of responsibility for a particular
aspect of the business to an external agency
(third party) The organisation does not have
ownership of this agency.

6.  When an organisation purchases services in
one country to be provided in a different
country. The organisation has ownership of
the services.

7.  Outsource
◦ Payroll
◦ Invoicing
◦ Accounting
◦ Bulk printing
◦ Backup and Recovery
◦ ICT Support
 Offshoring
◦ Telephone call centres
◦ Customer support
◦ Storage
◦ Programming
◦ Website and internet development

8.  Allows the company to concentrate on delivering a good service to their customers
and not worry about other services.
 Improved quality
◦ Specialist outsourced companies provide high quality services
 Staffing issues
◦ The service company would have access to a range of staff and can allocate the work to
 Capacity Management
◦ The level of service needed by the organisation may vary from month to month depending
on how much work there is (haven’t had to employ staff who may not be required)
 Cost Benefits
◦ Should reduce overall costs to organisation (no wages, no national insurance payouts etc.)
 Economies of Scale
◦ E.g. Printing in bulk is cheaper than printing one offs so a company might outsource their
printing
 Reduced Development Time
◦ Buying in additional support means that an organisation can develop products faster
 Standardised Business Processes
◦ Allows a range of businesses access to services previously only available to large
corporations
 Improved Risk Management
◦ Using specialists for advise e.g. on backup and recovery, may reduce the risk of data loss

9.  Lower Labour costs
 Lower Facility costs

10. Business
 Standards
◦ A service level agreement which specifies the
nature, scope and quality of the service should be
provided.
Customers
 Can be hostile to outsourcing e.g. oversees
customer support
◦ Language barriers
◦ Long waiting times
◦ Increased stress
◦ Lack of local knowledge
◦ Under trained employees relying on scripts from
knowledge based systems

11.  Using offshore centres for routine services
e.g. routine call centres THEN UK based ones
for more complex enquiries, that are likely to
involve discussion

12. Social
 Against
◦ Impact on UK jobs
◦ Decreased rates of pay
 For
◦ Improved living standards across the world
◦ Global markets become larger
Ethical
 For
◦ Valued local employment
 Against
◦ Exploitation
◦ Poor working conditions
◦ Long hours for low pay

13.  Benefits
◦ Labour and facilities may be cheaper abroad, resulting in cost savings
◦ Specialist skills more readily available, again at lower cost
◦ Some countries offer financial incentives to encourage new business
◦ Jobs and investment may be extremely valuable to the local economy
◦ Assists the global economy by providing work to less wealthy areas of the
world
 Limitations
◦ Language and cultural differences may cause difficulties
◦ Communications costs may be higher
◦ Legislation may be different abroad so it is important rights are not
breached
◦ Security risks may be increased as the organisation moves away from local
control

14.  Buying
 Contracting
 Leasing

15. Specific period
of time for an
agreed cost
LEASING
FACILITIES
Disaster manager
CONTRACTING strategy:
SOFTWARE
- Office space
EQUIPMENT
EQUIPMENT
Specific period Once contract
COMMUNI-
of time for an paid the goods CATIONS
agreed cost SERVICE
are owned
/ STAFF
A network NEVER owned but:
manager to - initial investment is low
cover maternity - usually includes support, upgrades etc.
- Paid more
- No benefits
Data Warehouse
BUYING
to backup data
Buying Equipment or Hardware can be done
through contracting
SOFTWARE Once bought you own:
-High level of initial investment
HARDWARE
EQUIPMENT - Items bought are assets of
the company
- support & maintenance are
extra costs

16.  What is Buying?
◦ When payments are received for ownership of a product or
service
 What is contracting?
◦ Making an agreement with a supplier to provide a specific
service for a specific period of time at an agreed cost
◦ An agreement between supplier and customer for
purchasing of equipment with costs spread over time. Once
full payment is reached, goods are owned by the customer.
 What is leasing?
◦ Making an agreement with a supplier for the rent of
something for a specific period of time at an agreed cost.
However, whatever is leased is never owned

17.  Benefits
◦ Initial investment over time will work out less than
contracting or leasing (e.g. no interest)
◦ The items purchased become assets of the company
 Limitations
◦ High level of initial investment
◦ Limited resale value
◦ Requires arrangements for support, servicing and
maintenance
◦ If money has to be borrowed to finance initial costs,
interest charges need to be considered

18.  Benefits
◦ Staff can be contracted to support short term projects
(paid more but not entitled to benefits)
◦ Companies can contract space and equipment for the
same reason (short term project)
◦ Can be an important part of a company’s disaster
management strategy e.g. contracting hot sites
◦ Spreading costs over time so no high initial investment
 Limitations
◦ Potential of being over reliant on the contracting of work
space
◦ If services are outsourced there is a lack of control
◦ Interest rates to consider

19.  Benefits
◦ Initial investment not as high as buying
◦ Usually additional support services included as well as
regular upgrades
◦ Makes financial planning easier (no single substantial
investments needed to keep abreast of new releases)
◦ Many companies lease dedicated communication lines to
establish their own WAN
 More secure connection than a shared line
 Better data transfer speeds
 Limitations
◦ Company does not own what is leased e.g.
hardware/software (unable to modify)
◦ Overall cost higher but spread out

20.  People
 Hardware
 Software
 Communication
 Consumables
 Facilities & Power

21.  HR will be largely responsible for the management of the people
◦ New appointments
◦ Staff development
◦ Pastoral care
◦ Disciplinary procedures
 Contracts outlining
◦ job description
◦ Responsibility
◦ Chain of command
◦ Disciplinary measures
 Policies
◦ Impact on security and acceptable use policies (and any other policies/procedures
employee must follow)
 Training and Staff Development
◦ Major impact on staff loyalty and retention
 HR Management software can be used to support this

22.  Procurement policies
 Asset Registers
◦ Database to store details of each piece of
hardware, location and technical specification
◦ Log faults, repairs and updates
◦ Helps with budgeting
 Network operating system can monitor hardware
 Backup power supplies

23.  Asset Management software
◦ Records software installed on each machine
 License Management software
◦ Monitors software installed, versions and suitable licenses etc.
◦ Important tool for compliance with Copyright and Patents Act
 Network installations / Client workstation installations
 Cloning software to push out software installations from
the server
 Anti Virus Applications

24.  Network management software
◦ Creates reports on network traffic
 Filtering software
◦ Restrict access to certain websites
 Conserve bandwidth
 Block sites that are inappropriate
 Setting up a proxy server
◦ Protects internal communication system
 Sits between users and internet
 Only IP address visible to web server is that of the proxy
(less use to hackers than individual machine IPs)
 Proxy caches common web pages also making them quicker
to load

25.  Network management software can control which users
have access to which peripherals e.g. printers, scanners
etc.
 Print accounting software can control amount of printing
done
 Ordering and distribution of consumables must also be
managed (audit log)
 A support desk might be used to request supplies
 A good relationship with suppliers helps ease purchasing
and control stock

26.  Facilities
◦ Owned or leased
◦ Health and safety legislation will impact:
 Design of room (AC, Cabling, spacing etc.)
 Furniture (adjustable swivel chairs etc.)
 Equipment (adjustable monitors etc.)
 Power
◦ Procurement policy will investigate consideration of suitable ‘green
computing’
◦ Training and Acceptable use policy should ensure that staff are aware of
what they can do to reduce energy consumption (e.g. switch off machines)
◦ System settings can be configured to enable power saving options (sleep)