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
- Difficulties in getting out of a contract
- Problems in foreseeing future needs
- Problems in reforming an internal IT department after the contract is finished
- Competitive edge
- Confidentiality
- Scope definition
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