Analysis of impact on IT personnel of outsourcing IT services in organization: a case study of procurement of IT services for “maintenance, upgradation and support services for BRTA-IS” in Bangladesh Road Transport Authority (BRTA)

Abstract

Information technology outsourcing has been an increasingly important phenomenon in recent times. IT outsourcing refers to the use of a third party vendor to provide IT services that were previously provided internally. In recent years, information systems (IS) have become increasingly crucial to the ability of an organization to compete effectively. Outsourcing of IT functions in the organization has been prevailing in today’s business environment, and is used as a strategic incentive for the organization to reach organizational goals. The increasing importance of IS has placed a strain on the ability of an organization to produce and manage information in a timely, relevant, and cost effective manner. Many organizations have begun to rely more heavily on external vendors to meet their IS needs (outsourcing). Despite the growth of IT outsourcing and its promise to save costs, few studies have empirically examined the impact of IT outsourcing on cost savings. In fact, whether IT outsourcing will lead to cost reduction is largely an empirical question. IT outsourcing can save costs for firms through increased efficiency in IT operation and effective use of IT staff, due to vendors’ production cost advantage stemming from economies of scale. Relying on an external supplier for a resource may allow an organization to take advantage of economies of scale, thereby generating cost savings, but it also often means relinquishing some degree of control over that resource. Several factors must be considered by managers in order to make rational outsourcing decisions which do not adversely effect competitive strategy. The objective of this dissertation is to study the role change for IT personnel and the impact it has on the organization. IT personnel’s roles are changed with knowledge, and the impact would be there on the organization after the IS has been outsourced. The dissertation is based on a case study of procurement of services for “Maintenance, Upgradation and Support Services for BRTA-IS” in Bangladesh Road Transport Authority (BRTA). The key term were investigated; roles and responsibility change and the relationship with the service provider. Findings imply that outsourcing of IT functions can have severe impact on IT personnel’s role change. The study found support for the need of more job training for IT personnel. Although, existing literature emphasizes the need for service oriented knowledge, our findings also imply the demand for theoretical technical knowledge. The case study found support for a new role for IT personnel with the service providers. iii Several factors contribute to the challenge IT personnel with the service provider. For the case study, we purpose improvement points in order to make IT personnel perform their new role better.