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chapter 19


CHAPTER 19-OUTSOURCING IN THE 21ST CENTURY
       









OUTSOURCING PROJECTS


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

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













 

Onshore outsourcing – engaging another company within the same country for services

Nearshore outsourcing – contracting an outsourcing arrangement with a company in a nearby country

Offshore outsourcing – using organizations from developing countries to write code and develop systems

                                       


Factors driving outsourcing growth


–     Core competencies
–     Financial savings
–     Rapid growth
–     Industry changes
–     The Internet
–     Globalization






OUTSOURCING BENEFITS

–     Increased quality and efficiency
–     Reduced operating expenses
–     Outsourcing non-core processes
–     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



Outsourcing Challenges


Outsourcing challenges include

  • Contract length
  1. Difficulties in getting out of a contract
  2. Problems in foreseeing future needs
  3. Problems in reforming an internal IT department after the contract is finished
  • Competitive edge
  • Confidentiality
  • Scope definition









Syaireen Shafiq,

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