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9 Cards in this Set
- Front
- Back
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Insourcing - in house development
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using the professional expertise within an organization to develop and maintain the organization's information technology systems
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Outsourcing
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organization provides a service or services for another organization choosing not to perform in-house
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6 Primary Reasons Companies Outsource
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1) tap outside sources of expertise
2) concentrate resources on core business 3) reduce head count and related expenses 4) eliminate need to invest in technology 5) reduce costs 6) better manage the costs of internal processes |
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Influential Drivers Affecting Growth of Outsourcing Mkt
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Core competencies: companies want to focus on their revenue growth but maintain a solid technology infrastructure
Financial Savings: cheaper to hire workers in China and India Rapid Growth: best IT processes allow a business to react quickly to changes in mkt Industry Changes: new trend of mergers and acquisitions create the need to integrate multiple core and noncore business functions into one business Internet: with e-business, barriers to entry have been significantly reduced to companies are more comfortable outsourcing Globalization: mkts opening worldwide so companies need a competitive edge |
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Benefits
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- increased quality and efficiency
- reduced operating expenses - focus on core competencies - reduced exposure to risks with large capital investments - service providers have economies of scales and expertise - advanced technologies - reduced head count and associated overhead spending - reduced time to market for products/services |
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onshore outsourcing
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engaging a service provider within the same country for services
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nearshore outsourcing
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contracting provider in a nearby country, often sharing a border
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offshore outsourcing
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using organizations from developing countries, geographically far away
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Challanges of outsourcing
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Contract length: most contracts are for a relatively long time pd
Competitive edge: competitive business advantage in an internal IT department can be lost in an outsourced arrangement Confidentiality: companies decide against outsourcing for fear of confidential info Scope definition: difficulties result from contractural misunderstandings |
