CHAPTER 19: OUTSOURCING IN THE 21th CENTURY

CHAPTER 19: OUTSOURCING IN THE 21TH CENTURY

Outsourcing Projects

Insourcing (in-house-development) is a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems.

outsourcing is an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house.

onshore outsourcing is engaging another company within the same country for services.

nearshore outsourcing is contracting an outsourcing arrangement with a company in a nearby country.

offshore outsourcing is using organizations from developing countries to write code and develop systems.

Outsourcing Benefits

i) includes:

•      increased quality and efficiency
•       reduced operating expenses
•       outsourcing non-core process
•       reduced exposure to risk
•       economies of scale, expertise, and best practices
•       access to advanced technologies
•       increased flexibility
•       avoid costly outlay of capital funds
•       reduced headcount and associated overhead expense
•       reduced time to market for products or services

ii) outsourcing challenges include:

 contract length

·                     difficulties in getting out of a contract

·                     problems in foreseeing future needs

·                     problems in reforming an internal IT department after the contract is finished

v  competitive edge

v  confidentiality