chapter 19




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


     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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