- In-sourcing ( in - house development ) - is a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems.
- Outsourcing - is an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house.
Three different forms of outsourcing options
- Onshore outsourcing - engaging another company within the same country for services.
- Near-shore outsourcing - contracting an outsourcing arrangement with a company in a nearby country. Often this country will share a border with the native country.
- Offshore outsourcing - using organizations from developing countries to write code and develop systems. In offshore outsourcing the country is geographically far away.
Factors driving outsourcing growth include :
- Core competencies
- Financial savings
- Rapid growth
- Industry changes
- The internet
- Globalization
Outsourcing Benefits
- Reduced operating expenses
- resources focused on core profit-generating competencies
- Access to outsourcing service provider's economies of scale
- Access to advanced technologies.
- No costly outlay of capital funds.
Outsourcing Challenges
- Contract length
- Competitive edge
- Confidentiality
- Scope definition
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