♦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
