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

v  scope definition