OUTSOURCING PROJECTS
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Insourcing (in-house-development) – A common
approach using the professional expertise within an organization to develop and
maintain the organization’s information technology systems
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Outsourcing – An arrangement by which one
organization provides a service or services for another organization that
chooses not to perform them in-house
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Onshore outsourcing – engaging another company
within the same country for services
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Near shore outsourcing – contracting an
outsourcing arrangement with a company in a nearby country
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Offshore outsourcing – using organizations from
developing countries to write code and develop systems
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Big selling point for offshore outsourcing
“inexpensive good work”
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Factors driving outsourcing growth include;
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Core competencies
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Financial savings
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Rapid growth
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Industry changes
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The Internet
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Globalization
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According to PricewaterhouseCoopers “Businesses
that outsource are growing faster, larger and more profitable than those that
do not”
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Most organizations outsource their noncore
business functions, such as payroll and IT
OUTSOURCING BENEFITS
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Outsourcing benefits include;
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Increased quality and efficiency
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Reduced operating expenses
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Outsourcing non-core processes
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Reduced exposure to risk
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Economies of scale, expertise and best practices
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Access to advanced technologies
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Increased flexibility
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Avoid costly outlay of capital funds
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Reduced headcount and associated overhead
expense
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Reduced time to market for products or services
OUTSOURCING
CHALLENGES
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Outsourcing challenges include;
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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
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Competitive edge
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Confidentiality
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Scope definition
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