Abstract
M.B.A.
In the current decade, "whole of IT" outsourcing appears to be losing ground, and other
options are being considered and sought, such as selective outsourcing. Every product,
service, or technology has a life cycle, and although the outsourcing industry is at its
maturity level, at the same time it is also going through various growth stages and still
evolving with best practices. Wholesale or comprehensive outsourcing clearly seems to
be on the decline. Highlights of this analysis are as follows:
The whole of IT" outsourcing can be seen as a contract service agreement in which an
organisation hands over the majority of IT responsibilities to an external company.
These contracts are long-term agreements designed to give higher control and
transparency on costs, generally with a fixed price arrangement. In the selective
outsourcing model, organisations may choose to outsource part of their IT. For
example, the IT infrastructure could be broken down into separate agreements for the IT
network, desktop, applications, and help desk. Depending upon the spread and
competencies of internal resources, the organisation may choose to outsource one or
all of the components.
Outsourcing has become one of today’s most powerful, organization shaping
management tools and also more so in South Africa. Chapter Two covers the fact that
companies experience growth based on specialization, expertise and excellence. It is
growth based on focusing on those areas that most directly contribute to a company’s
success. Outsourcing has become the new frontier for the modern business.
When a decision is made to outsource, the company needs to decide which of the
activities or services currently done in-house can be defined as being non-core to the
business. It is very important that the management of these non-core functions is not
outsourced.
“The decision to outsource the IT function is primarily based on the need to get rid of an
operational problem. IT can become a very expensive cost centre with all the difficulties
associated with managing a technology intensive infrastructure” says Rose (1999:24).
Outsourcing provides the opportunity to redesign the IT function, and the potential to
access highly specialized skills to extend capability.
The purpose of this research is to address the following problem statement: What
percentage of the budget in the South African IT market by sector is spent on the
specific mentioned selective outsourcing services? The author looks at this problem
statement and uses available literature to do an in depth study to reach an
understanding of the researched subject.
In Chapter three, an appropriate research approach that is inductive has been followed.
The telephone interview was chosen for data collection as the most suitable and cost
effective method. A questionnaire was designed with undisguised questions to ensure
consistency and relevance of the responses. The question construction that followed
took into consideration question content, question wording, response structure, and
question sequence.
Finally, pre-testing of the measurement tool was done to ensure validity and reliability,
thereby ensuring that a foundation was laid for Chapter Four in which presentation and
analysis of the results are given.
Chapter four presents the analyses and interprets the results of the study as supplied by
respondents through the questionnaire. The results are presented in tables showing
percentage figures and numbers for individual response categories, totals and averages
to present a clear picture. Finally there is the analysis and interpretation of each section
as presented in the tables. The researcher applies the literature discussed in Chapter
Two to support and justify the use of the questions asked, and the application thereof to
the concepts of the outsourcing and the specified selective outsourcing services
business in South Africa. The research was conducted to address the problem and subproblems
discussed in Chapter One.
In conclusion in response to these problems, the investigated selective IT services
which are mentioned in detail in chapter one model has emerged as an attractive
alternative to the single-vendor approach. Essentially, a selective approach involves
choosing best-of-breed vendors to administer various business services or business
functions, leading to either a total or limited solution. However, although selective
outsourcing may indeed address some longstanding outsourcing challenges, it also
presents some new management issues.