Riordan Manufacturing Virtual Organization Offshore Technology Introduction Technology offshore outsourcing is the process of hiring external firms or organizations to carry out specific business functions in a different country from the one the products are manufactured. Riordan as a manufacturing company has engaged in offshore technology outsourcing as a way of increasing efficiency in the manufacturing process of their products hence making the company more profitable. Various information technology sections such as data processing, computer programming and technical support are among the most outsourced areas in the field of technology. Riordan manufacturing virtual organization is in the process of incorporating two major technology offshore outsourcing projects namely; offshore software development together with information technology outsourcing. This paper evaluates the advantages and disadvantages of each potential project before it is implemented. Discussion Software R& D technology offshore outsourcing The offshore software R & D is an offshore outsourcing project availing software development services to a firm by a foreign supplier who is located in an entirely far away country where clients of the manufacturing firm cannot trace him. This form of technology offshore outsourcing is rather young and is still in the early stages of development although India has already incorporated it into its businesses hence it can be applied at Riordan too. This project involves contracting an offshore outsourcing firm to carry out the software development phase as the local service providers often charge higher development costs for the same software development project (Sparrow, 2003). 1 / 6
Due to the fact that offshore outsourcing or software is a new concept in the information technology world, only four countries in the world can provide the services as they are the only ones who are capable of meeting the scaling up of the demands of the large scale projects. These countries are India, Ireland, Canada and Israel while Brazil has been following the four closely especially due to its close proximity to the United States hence the closer time zone making them a better alternative for the country (Wijers and Verhoef, 2009). Advantages of offshore software development outsourcing Offshore software development outsourcing has enabled many firms such as Riordan manufacturing to come up with software-based projects which are customized according the unique needs presented by the firm. This has led to increased efficiency in satisfying customer needs and at the same time attaining high profits after utilizing the new customized products (Sparrow, 2003). The other advantage is that with increased connectivity of the world s major cities where most firms such as Riordan are located; there are enhanced chances of carrying out freelance outsourcing providers from all over the world. This will enable Riordan to seek the cheapest and most reliable software development outsourcing firm from the internet hence fewer cases of fraud are experienced (Wijers, 2009). Offshore outsourcing of software development will enable Riordan manufacturing organization to have a stable software developer who will be in charge of not only the information technology in one department but in all departments of Riordan. Thus the entire organization will be subjected to uniform software programs hence reducing any conflicts which may arise due to uncoordinated programming. This is critical at ensuring that only quality software projects are adopted and used by the Riordan firm as the offshore outsourcing firm will be liable to provide the best (Sparrow, 2003). 2 / 6
As offshore software development outsourcing is a continuous process that never ends, Riordan is assured of continued support and being supplied with reliable products by incorporating an offshore outsourcing company in the software development project. Continuity, as well as, stability is one advantage in any business especially where software is concerned as it applicable in the entire firm and its applicability is continuous hence incorporating one offshore outsourcing firm result in fewer costs for existing and new software development projects in Riordan (Wijers, 2009). Disadvantages of offshore software development projects In order for Riordan to ensure that their offshore outsourcing software development projects are successful, management has to maintain a single provider which is quite difficult as most of the freelance offshore technologies outsourcing firms are quite fragile. Hence trust has to be earned by Riordan prior to engaging the offshore outsourcing firm. This is a time consuming process thus patience has to be employed sufficiently (Sparrow, 2003). As the offshore software development outsourcing firms and concepts are quite new in the market, it would be quite difficult to come upon a reliable provider. This is especially made more challenging by the fact that most of the providers are freelance hence getting a reliable evaluation or recommendation report from other firms which have benefited from the offshore outsourcing firm tends to be rather complex. This is especially difficult for firms which fall in the global city categories of Tier II and Tier III which are branded as less suitable for offshore software development due to a number of factors. The nature of infrastructure and global connectivity are some of the factors that must be put in place prior to contracting the offshore software development outsourcing firms (Wijers, 2009). The software development methodologies are quite different and unique such that the offshore software development outsourcing firm has to be conversant with the specific details of the firm. This entails baring all the details that are necessary in the production of software which will benefit Riordan manufacturing organization. Some of the information could be privy hence it is a 3 / 6
major risk for Riordan as any mishaps in the software development project may lead to the information landing into the wrong ears or eyes (Sparrow, 2003). Offshore information technology outsourcing Information technology outsourcing refers to a company seeking for the external services of other information technology specialists in the non-technical information technology to avail the services in firms such as Riordan. There are wide ranges of information technology services which are outsourced by firms include installation and development of internet enabled information systems which make work easier in the firm (Wijers, 2009). Advantages of offshore information technology outsourcing When Riordan seeks for offshore information technology services from specialist IT outsourcing firms, the organization will be in a position to concentrate on the manufacturing aspect of the business. This results in enhanced productivity of products, as well as, laying aside more time for research and development of activities which will boost organizational performance. Therefore, the overall performance of the Riordan manufacturing organization as implementation of advanced information systems has been proven to make business easier for most companies that have incorporated the projects in their daily activities (Sparrow, 2003). Consequently, research has shown that offshore information technology outsourcing is essential at improving the level of knowledge and information in a firm. This is made possible by the fact that the employees of Riordan manufacturing have unlimited access to the internet hence they arm themselves with relevant knowledge which is applicable to their delegated tasks. Similarly, it provides top management with a level ground for which they can identify and reward creative employees who are working towards enhanced productivity by making use of the information systems. Product innovation which leads to improved quality of the manufactured goods is an essential part of the increased knowledge accessibility (Wijers, 2009). 4 / 6
The offshore information technology outsourcing project will come in handy during market research especially if Riordan wishes to venture into new markets or introducing new products into the market. Consequently, Riordan will be able to establish significant up to date databases of their clients and their consumption behavior hence making it easy to trace the trend of their products. Such information is crucial in laying present and future marketing strategies by the marketing team at Riordan. Information technology is quite efficient in marketing, advertising and ensuring that business transactions are carried out with fewer challenges (Sparrow, 2003). Disadvantages of offshore information technology outsourcing One dire disadvantage of offshore outsourcing of information technology services is the misplaced concept that advanced technology will lead to Riordan s productivity by seeking the lowest charges from the offshore outsourcing firm. This may prove to be disastrous when Riordan opts for a less expensive contract which may not be as worthwhile as expected hence resulting in loss of resources in Riordan. Such unscrupulous deals arise where the quality and nature of information systems is not compatible with the needs of the Riordan manufacturing plant. Therefore, the costs incurred by the receiving company may be more than the costs that are spared with introduction of the new information system hence failure of Riordan are highly placed(wijers, 2009). Quite similarly, Riordan manufacturing organization may end up loosing some of its most loyal and competent employees. This is attributed to the fact that information technology often entails using computerized applications to carry out tasks which could otherwise have been executed by human beings. This leads to displacement of some of the employees and incase the offshore outsourcing information technology project fails, it would be difficult to convince the same employees to come back (Sparrow, 2003). Conclusion 5 / 6
Offshore outsourcing of technology services is a complex process which can turn out to be fragile thus causing unwanted disaster in a company. However, with adequate information and substantial research marketing, Riordan can make productive overhaul in its manufacturing activities by seeking the services of experts. Offshore outsourcing of software development and information technology services as projects have their own advantages, as well as, disadvantages hence the need for Riordan to critically look at each before implementing them. References Sparrow, E. (2003), Successful IT outsourcing: from choosing a provider to managing the project. Springer Wijers, G. and Verhoef, D. (2009), It Outsourcing: Contracting the Partner. Van Haren Publishing 6 / 6