CHAPTER 15:OUTSOURCING IN THE 21ST CENTURY

•          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

•          The reason why company outsource

•          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 competencies

•          Many companies have recently begun to consider outsourcing as a means to fuel revenue growth rather than just a cost-cutting measure.

•          Financial savings

•          It is typically cheaper to hire workers in China and India than similar workers in the United States.

•          Rapid growth

•          an organization is able to acquire best-practices process expertise. This facilitates the design, building, training, and deployment of business processes or functions.

•          Industry changes

•          High levels of reorganization across industries have increased demand for outsourcing to better focus on core competencies.

•          The Internet

•          The pervasive nature of the Internet as an effective sales channel has allowed clients to become more comfortable with outsourcing.

•          Globalization

•          As markets open worldwide, competition heats up. Companies may engage outsourcing service providers to deliver international services

•          According to PricewaterhouseCoopers “Businesses that outsource are growing faster, larger, and more profitable than those that do not”