Information Systems Outsourcing in Nigerian Business Organizations

ABSTRACT
Outsourcing is one of the sought after strategies adopted by most of the organizations in the last
couple of years to manage their Information systems, which led to the increase in the amount of
literature dedicated to it. Hence decided to survey the literature with the intention of identifying
the important topics, methodologies, benefits and the challenges associated with Information
System Outsourcing. Aim is also to offer suggestions on improving the research area in this
field.

The main purpose of the survey was to find out the factors that influence outsourcing of services
in Nigerian Business Organizations, a system that have lately adopted as a well calculated
strategy in their operations. The Organizations hire other firms to provide some of the non- core
services. The study was guided by the specific objectives of identify the benefits derived from
outsourcing of service and to determine the challenges to effective implementation of
outsourcing of services.

The authors followed a descriptive study design, investigating the trends, perceptions and
effectiveness of outsourcing in some Nigerian Organizations. The data was collected by use of a
self-constructed questionnaire which solicits information from various organizations involved
and expected to be involved in IS outsourcing activities.

The study findings show that the types of services outsourced by Organizations in Nigeria
include Software and Hardware services. Some of the critical factors that influence outsourcing
of services include inadequate supply of experts for the outsourced services and cost
effectiveness along with the soaring and recurring unemployment problems that contributed to
the existence of partnership in the hardware and software service industry in Nigeria. Most
educated and unemployed IT professionals go into business partnerships that offer direct
outsource services to already existing organizations especially banks, finance houses and other
trading organizations. Business organizations in Nigeria tend to believe that this conglomerate of
professionals will do a better job than individuals employed for the same purpose within their
organizations. On the other hand, payroll and credit control comes last in this cadre as most
organizations prefer to employ competent and experienced financial professionals to take care of
these aspects of their businesses.

The benefits derived from outsourcing of services include frequently introducing more and
broader expertise in this field for any organization than it is available from their in-house
personnel. If the outsourcer provides more efficient service, Personnel costs are lowered and
recurring expenses may go down.

However, based on the finding from the study beyond cost/benefit analysis there were major
challenges faced by Organization in the implementation of outsourcing process. These include
the involvement of staffers within organizations directly or indirectly affects the success of any
outsourcing arrangement. When Information Systems are outsourced, there are many changes,
which should take place. At least to some degree, control is lost. Cost changes, but do not
necessarily decreases. Knowledge of organizational operation is lost for outsourced functions;
Outsourcing does not eradicate management responsibilities but it only change their nature and
level. To put differently, someone still has to manage the contracts for the outsourcers and the
interface etc. Trying to outsource in order to beat time limits may not always produce the desired
results. It is possible for the service provider to disappoint or lack a proper understanding of the
client’s business. In overall, the long-term costs basically favor a well-judged balance of
outsourcing and the management of in-house and it vary from one firm to the other.

In conclusion, it’s not a simple decision to make if whether to outsource or not. Evaluation of
outsourcing options requires questioning the implications of the short and long-term costs, length
of the outsource agreement and the two party obligations in case something goes wrong must be
considered.

Based on the findings of the study, it is recommended that organizational functions requiring
managerial or executive decisions typically should not be outsourced.

References:
Longe Olumide, Akinola Olalekan, Information Systems Outsourcing in Nigerian Business
Organizations - Trends, Perceptions and Effectiveness, Computing & Information Systems, [s.
l.], v. 15, n. 2, p. 1–9, 2011.  ISSN: 1352-9404, Accession Number: 7435669.