The Decision Of Global Outsourcing Essay

1217 Words 5 Pages
Global Outsourcing A listing of the major decisions that firms have to make, and how firms decide whether or not they should engage in global outsourcing, has been provided in this critical essay. The comparison of major host countries where the companies of the United States (US) have been outsourcing their Information Technology (IT) products and services, and the risks associated with a few of these countries, are also highlighted. Finally, a summary has been provided on what firms should do in order to achieve excellence in global outsourcing.
The Decision of Global Outsourcing
There are generally two major reasons behind an organization’s IT outsourcing decision. The first reason is the popular trend that organizations should focus more on their core functionalities, and outsource all other vital functions. The second reason is an age-old policy of organizations to earn revenues and profits by exploiting the price differences between different locations. The organizations achieve these two goals, either by outsourcing their IT requirements to other foreign companies and vendors, or by starting their own IT divisions in different countries (King, 2007).
The major reason of outsourcing IT to other companies is because of its non-core nature (Grover & Teng, 1993). Furthermore, if Information System (IS) related functionalities are outsourced to other companies, who have the expertise in handling IT activities, substantial cost benefits may be achieved (Loh & Venkatramen,…

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