Outsourcing Implementation by Federal Government Entities - Paper Example

Outsourcing refers to the transfer of processes and activities initially carried out within the organization to an external party. It is beyond reasonable doubt the most long-standing trends in the present day business world. Recent studies have indicated considerably growth in outsourcing, particularly in the field of Information technology. Such growths appear to continue at least for the foreseeable future. Many organizations are even considering increasing the pace of their activities and processes of outsourcing. On top of its development as regards scale, research firms and leading consultancies have projected that it will also grow in terms of scope, establishing novel models according to which organizations appraise the resources and skills of other, usually more specialized firms. Growth in the outsourcing and the concurrent development of new models of outsourcing are actually turning out to be the foremost business trend presently.

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Outsourcing is not a new issue in the present world business environment; it has indeed been widely used in cutting costs as well as improving strategic focus. Presently, organizations continue to look for assistance from without to enhance faster organizational change, for the establishment of new strategies and reshaping of organizational boundaries. To accomplish these objectives, organizations are establishing partnerships with each other to quickly and considerably enhance performance at the organizational level, a matter called transformational outsourcing.

The sector of information technology is whereby outsourcing has been practiced extensively. This widespread computing impact has made the information technology sector an important or critical part of the day-to-day operations as well as the key to competitive success. Nevertheless, in the current worlds enhanced commercial environment, it is not possible for any one organization to comprehend, develop and deploy every required information technology. Therefore, companies actively look for external providers of information technology to acquire the required services of information technology at reduced costs and to accomplish other objectives like better performance of IT, enhanced services, and creativity or innovation. Nonetheless, this is what is known as the IT outsourcing; it can be described as the delegation, via a contractual pact, of all or any section of the responsibilities of management, technical resources and human resources associated with the provision of services of information technology to an outside vendor (Hertzfeld, 2004).

Outsourcing of IT services has helped in reshaping the UAE public sector over the past two decades when it started being embraced extensively. Following the high rate of uncertainty that is involved in the IT domain, and the raised scale of the functions of IT that are outsourced, it is true that only contractual agreements cannot be adequate for the management of outsourcing relationships. Particularly, when the IT functions that are outsourced have significant impact on the level of enterprise like the CRM or ERP, it needs a shift in the managerial attitude of the CIOs (chief information officers) from the focus on efficient management together with maintenance of agreements to proactive establishment of alliances and cooperation.

The UAE government has undertaken several administrative reforms since 1971 aimed at inculcating a culture of efficient policy and service improvement implementation through various tools. Smart government is one of the tools that were identified to help federal government entities perform their mandates properly (United Arab Emirates Government, 2012). While the UAE government has allocated adequate financial resources towards achieving this goal, it has been faced with the challenge of reducing number of IT graduates in its universities and shortage of IT expert and high standard skilled technical. This is even though the number of IT-related projects have been rapidly rising in government entities in order to accommodate the aspects of the smart government initiative (Jimenez et al, 2015)

Therefore, it is important to undertake a research in this area to examine the level or degree at which outsourcing services are used to meet the requirements of Smart federal government entities in the UAE.

Statement of Purpose

Information technology has become an important issue in the present day society. It is extensively used in various settings and commercial organizations utilize it for different purposes; which include a system of manufacturing, internet application, electronic data interchange, support software for office, that are used for the purposes of creating economic gains via improvement of the operative work tasks together with business activities (Frame, 2003). As a result of the developments in outsourcing that have been discussed above and the ensuing restructuring of different industries, researchers are increasing their attention to this subject. The base of current research falls within various streams of research, which include strategic management, supply-chain management, international business, economics, information systems and marketing, whereby all of them have covered matters to do with outsourcing quietly widely, although the most predominant are the first three.

The researcher selected a specific context and narrowed it down further because outsourcing as a concept is very context-dependent. It has not only been found that the size of an organization has an influence on the decision concerning outsourcing together with its management, but it has also been established by recent research that situational factors like too. Software development can be described as a business process or activity that is similar to marketing and sales of software, and the activities of outsourcing software development encompass various characteristics as well as challenges as regards management as compared to activities that are related to outsourcing marketing, for example. Therefore, for the purposes of minimizing the number of possibly influencing variables, the researcher chose specific IT organizations for the study. Following the UAEs significant investment of resources to fulfill the Smart Government initiative, which was initiated in May 2013 (Al Mansoori, 2014), the level at which the government utilizes the ITO services and its impacts has not been quantified, hence the objective of this research is to examine level or degree at which outsourcing services are used to meet the requirements of Smart federal government entities in the UAE.

The research will seek to answer the following research questions to fulfill the aim of this research:

How is outsourcing implemented by federal government entities to deliver smart government?

Why do federals government entities use outsourcing for smart movement?

Do they have the capabilities to leverage outsourcing knowledge and benefits?

What are the potential outcomes and results of the outsourcing?

Literature review

Organizations outsource an extensive variety of information technology functions in the modern globalized economy, to have access to infrastructure technologies, enhance business applications, improve the business processes, or even accomplish business transformations. Whereas information technology may be leading the charge, it is outsourcing that acts as the provider of the fuel, or propulsion, according to the CEO of the Outsourcing Institute, Frank Casale. Latest reports in the industry show that a shift on the IT outsourcings orientation from transformation-driven to transaction-driven. Although the reduction of expenses or costs remains as the main reason for the outsourcing of IT services, what closely follows it include objectives like the improvement of the focus of the organization and resources that cannot be obtained by the company internally, such as materials for development of the IT projects even the required skills, which should be high-tech or up-to-date.

Such results are consistent with the report by IDC, which came up with substantial evidence that organizations have sought outsourcing for reasons that are more strategic, which include keeping up with the latest technology, formation of cooperation and alliances, creation of value for the company and its clients, and widening or extending the reach of operations and infrastructure. It has been recognized that more and more organizations are not only regarding as a tactical and reactive activity, but also a proactive and a strategic one generally. However, the number of organizations that actually comprehend the strategic worth of outsourcing is still far from where it is supposed to be.

Another study that was recently carried out by Forrester demonstrated that the major reason or driving factor for outsourcing is gaining strategic business advantage and that the enhancement or improvement of information technology is the foremost result of the practices of IT outsourcing. This outcome is in contradiction with the previous stress on the reduction of costs. The disparity in the results might be explained by an incongruity that the focus of many companies is too much on the concerns that are related to cost, when they make decisions regarding the outsourcing of IT functions. This is the fact, even though they later come to expect results that are more than just saving costs, which include strategic business or organizational improvement, enhanced services as well as focus on the core competencies. Such incongruity makes it very difficult for companies to accomplish the objectives that are not stated or described at the start of the outsourcing of IT. More so, the widespread focus on the reduction of cost had greatly hampered the ability of a company to be innovative. However, the extensive focus on the reduction of costs is just right as long as it is, what the company intended.

(Rahman, et al 2015) observes that the evolving relationship between innovation, public service quality, e-Government and smart government is not unique to UAE; these changes are taking place in many of the countries in the contemporary global society. Globalization has resulted to increased financial capital and human movement, evolved relationships between citizens and states, as well as spread knowledge and information through technological advancements (Kirk, 2010). As a result, governments have been forced to embrace new initiatives that reflect these new changes. They have been called upon to adopt and implement new approach related to information technology, and which minimizes disadvantages and maximizes the benefits (Jimenez et al, 2015). The needs of contemporary global society require governments to maintain public governance that is characterized by smart and open government making the most of IT. The implementation of the smart government is a complex task requiring a multidisciplinary approach and enormous human, technical, and financial resources. In order to bridge the gap in the availability of any of these resources, governments can resort to measures such as outsourcing (Gingrich, 2003). This aspect explains the reason why the use of outsourcing of IT services is necessary in meeting the requirements of smart federal governments entities in UAE.

Through initiative and continuous enthusiasm from its leaders, UAE have made tremendous progress towards achieving quicker results in the implementation of smart government (Rahman et al, 2012). In particular, it has made great progress towards the achievement of the following strategic goals: improving her competitiveness in the e-Government field; promoting cooperation between government entities and establishing advanced infrastructure; promoting e...