chapter 19
outsourcing in the 21st century

outsourcing projects

• insourcing (in-house-development) - a common approach using professional expertise within an organization to develop and maintain the organization's information technology systems
• outsourcing - an arrangement by which one organization provides a services 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 include:
• core compentencies
• financial savings
• rapid growth
• industry changes
• the internet
• globalization
• accoding to Pricewaterhouse Coopers "businesses that outsource are growing faster, longer, and more profitable than those that do not"
• most organizations outsource their noncore business functions, such as payroll and IT
• outsourcing benefits include:
• increased quality and efficiency
• reduced operating expenses
• outsourcing non-core processes
• reduced exposure to risk
• economies of scle, expertise, and best practices
• access to advanced technologies
• increased flexibility
• avoid costly outlay of capital funds
• reduces headcount and associated overhead expense
• reduced time to market for products or services
• 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