Chapter 15 - Outsourcing in the 21st Century

Here we go to the last chapter of this subject.

OUTSOURCING PROJECT

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

Reason 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:

1) Core competencies

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

2) Financial savings

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

3) 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.

4) Industry changes

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

5) The Internet

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

6) Globalization

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

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

OUTSOURCE BENEFITS :

Outsourcing benefits include:

- Increased quality and efficiency

- Reduced operating expenses

- Outsourcing non-core processes

- Reduced exposure to risk

- Economies of scale, expertise, and best practiceS

- Access to advanced technologies

- Increased flexibility

- Avoid costly outlay of capital funds

- Reduced headcount and associated overhead expense

- Reduced time to market for products or services

THANK YOU :)