Outsourcing

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• Outsourcing

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Outsourcing

• 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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Outsourcing

• Typically, the outsourced process or function is
  a noncore business activity
• The worldwide IT outsourcing market will reach
  164 billion by 2005
• Offshore outsourcing using organizations from
  developing countries to write code and develop
  systems
• According to Forrester Research, nearly half of
  all businesses use offshore providers, and
  two-thirds plan to send work overseas in the near
  future

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Insourcing

• Insourcing a common approach using the
  professional expertise within an organization to
  develop and maintain the organization's
  information technology systems

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Most organizations outsource their noncore
business functions, such as payroll and IT
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Outsourcing growth drivers

• Globalization
• The Internet
• Growing economy and low unemployment rate
• Technology
• Deregulation

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Outsourcing Benefits

• Increased quality and efficiency
• Reduced operating expenses
• Outsourcing non-core processes allows businesses
  to focus on their core competencies
• Reduced exposure to risk
• Access to outsourcing service providers economies
  of scale and expertise and best-in-class
  practices
• Access to advanced technologies
• Increased flexibility
• Avoid costly outlay of capital funds
• Reduced headcount and associated overhead expense
• Reduced frustrations and expense related to
  hiring and retaining employees in an
  exceptionally tight job market
• Reduced time to market for products or services

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Whos Who in Offshore Outsourcing
Big selling point for offshore outsourcing
inexpensive good work
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Canada
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India
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Ireland
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Philippines
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China
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Malaysia
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Mexico
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Argentina
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New Zealand
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Ukraine
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Outsourcing Challenges

• Contract length
• Difficulties in getting out of a contract
• Problems in foreseeing future needs
• Problems in reforming an internal IT department
  after the contract is finished
• Competitive edge
• Confidentiality
• Scope definition

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Future Trends

• Companies should look for value-based pricing
  rather than the lowest possible price
• Multisourcing a combination of professional
  services, mission-critical support, remote
  management, and hosting services that are offered
  to customers in any combination needed