I. Background

Why IT Outsourcing?

With today's economic conditions providing severe challenges in various industries including the education industry, more companies are evaluating the effective use of external providers to help them support and expand their IT organizations.

The following technology and industry trends reshape some of the ways in which companies operate and are in turn helping to support the increased use of outsourcing:

  • Cost savings: Today's global economic crisis is inspiring companies to explore ways to reduce their operating costs and improve efficiencies.
  • Sustainable IT: To expand the computing power or IT resources without making larger investments in buying hardware or spending more on IT infrastructure costs, outsourcing can help consolidate and virtualise the infrastructure and purchase IT capacity to produce a lower total cost of ownership.
  • Flexibility: Instead of merely seeking the lowest cost, more sophisticated approach of outsourcing is to blend flexible capacities from a range of outsourcers in diverse locations into an effective, customised mix that addresses the information and communication needs.

See the article (KPMG publication – "A New Dawn – China's Emerging Role in Global Outsourcing")

What are the IT Outsourcing risks? – Fast pace of change in technology use is leaving businesses at risk

As organisations are looking for ways to cut their IT costs, they have increasingly turned to external providers who host applications on their behalf. These services, including software as a service (SaaS), are now used by over majority of the organisations polled.

At the same time that companies are increasing their dependence on other organisations for their IT services, there has been an explosion of new cyber attacks. 61 percent of large organisations have detected attempts to break into their network in 2009, twice as many as two years ago. Worryingly, only 17 percent of those with highly confidential data at external providers ensure that it is encrypted.

Outsourcing IT services does not make the security risk go away, but few companies are taking enough steps to ensure their outsourced services are not vulnerable to attack.

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