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
- Factors driving outsourcing growth include;
- Core competencies
- Financial savings
- Rapid growth
- Industry changes
- The Internet
- Globalization
- According to PricewaterhouseCoopers “Businesses that outsource are growing faster, larger and more profitable than those that do not”
- Most organizations outsource their noncore business functions, such as payroll and IT
OUTSOURCING BENEFITS
- Outsourcing benefits include;
- 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
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