CHAPTER 15 : OUTSOURCING IN THE 21st CENTURY

OUTSOURCING DEVELOPMENT

•          Insourcing  (INTERNAL)– a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems

•          Outsourcing (EXTERNAL) – 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, often this country will share a border with a native country.

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

•          Reasons companies outsource

•          Factors driving outsourcing growth include:

1.       Core competencies

2.       Rapid growth

3.       Industry changes

4.       The Internet

OUTSOURCING BENEFITS

·         Increased quality and efficiency of a process, service, or function

·         Reduced operating expenses

·         Resources focused on core profit-generating competencies

·         No costly outlay of capital funds

·         Reduced time to market for products or services

·         Reduced head count and associated overhead expenses

OUTSOURCING CHALLENGES

·         Contract length 

·         Competitive edge

·         Confidentiality

·         Scope definition