MGT 300 CHAPTER 15 : OUTSOURCING IN THE 21st CENTURY

LEARNING OUTCOMES :

  1. Describe the advantages and disadvantages of insourcing, outsourcing, and offshore outsourcing.
  2. Describe why outsourcing is a critical business decision.

  • OUTSOURCING PROJECTS 
-Insourcing (in-house-development) : is a common approach using the professional expertise within an organization's information technology system

-Outsourcing : is an arrangement by which one organization provides a service or services for another organization that chooses not perform them in house 

*Reasons companies outsource


* 3 TYPES OF OUTSOURCING 
  1. Onshore outsourcing : engaging another company within the same country for services
  2. Nearshore outsourcing : contracting an outsourcing arrangement with a company in a nearby country
  3. Offshore outsourcing : using organization from developing countries to write code and  develop systems














*Big selling point for offshore outsourcing 'inexpensive good work'.


*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 facilities 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 organization outsource their noncore business functions such as payroll and IT



* Outsourcing benefits include :
-Increased quality and efficiency 
-Reduced operating expenses
-Outsourcing non-core process
-Reduced exposure to risk
-Access to advanced technologies 
-Increased flexibility 

*Outsourcing challenges include : 
  1. CONTRACT LENGTH : most outsourcing contracts span several years and cause the issues discussed above get a difficulties in getting out of a contract, have a problems in foreseeing future needs and problems in reforming an internal  IT departments after the contract is finished
  2. COMPETITIVE EDGE : effective and innovative use of IT can be lost when using an outsourcing service provider
  3. CONFIDENTIALITY : confidentiality information might be breached by an outsourcing service provider, especially one that provides services to competitors 
  4. SCOPE DEFINITION : scope creep is a common problems with outsourcing agreements
                                                Image result for thank you

Comments

  1. Outsourcing in the 21st century is reshaping business strategies! With FiraCode, ensure your outsourcing platforms are hosted with the best performance and security.

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