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Friday, September 16, 2016

CHAPTER FIFTHTEEN : 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
Near shore 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



Big selling point for offshore outsourcing “inexpensive good work”




Factors driving outsourcing growth include;

·         Core competencies-
·         Financial savings
·         Rapid growth
·         Industry changes
·         The Internet
·         Globalization

Most organizations outsource their noncore business functions




OUTSOURCING BENEFITS

Outsourcing benefits include;

o   Increased quality and efficiency
o   Reduced operating expenses
o   Outsourcing non-core processes
o   Reduced exposure to risk
o   Economies of scale, expertise and best practices
o   Access to advanced technologies
o   Increased flexibility
o   Avoid costly outlay of capital funds
o   Reduced headcount and associated overhead expense
o   Reduced time to market for products or services


OUTSOURCING CHALLENGES

Outsourcing challenges include;

o   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

o   Competitive edge

o   Confidentiality

o   Scope definition 



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