Outsourcing

Paper Summary:

This paper investigates IT outsourcing as it relates to acquisition. The paper includes a review of the advantages of IT outsourcing, such as cost savings, access to new skill sets, and access to cutting-edge technology. In addition, the paper examines the disadvantages of IT outsourcing, such as loss of intellectual property, poor communication, high costs, and limited technologies. The main focus of the paper is IT outsourcing and acquisition as it pertains to the acquisition of new skill sets and business acquisitions. Management recommendations are also be provided. The paper begins with a definition of IT outsourcing.

Introduction
Outsourcing IT
Definition
Advantages
Cost Savings
Access to New Skill Sets
Access to Cutting Edge Technology
Disadvantages
Loss of Intellectual Property
Poor Communication
High Costs
Limited Technologies
IT Outsourcing and Acquisition
Acquisition of New Skill Sets
Business Acquisitions
AT&T and IBM
CACI and American Management Systems
Systems Management Specialists (SMS) and the SMS Business Unit
Recommendations
Discussion and Conclusion

From the Paper:

"Those advantages include the access to modern technology. In addition, the most significant advantage of IT outsourcing is Cost savings. The article explains that ferocious competition has led many corporations to reorganize and scale back staffs in an attempt to reduce costs (Antonucci, 1998). The Vendors that handle the IT outsourcing are able to save money for several reasons (Antonucci, 1998). For instance, the vendors "have much tighter control of fringe benefits and run much leaner overhead structures (Antonucci, 1998)." Additionally the vendors are able to utilize low-cost labor pools more aggressively and, with the help of modern telecommunications, can move data centers to low-cost areas (Antonucci, 1998). The vendors are also able to apply excellent standards to the company's present IT staff (Antonucci, 1998). Outsourcing also as the following benefit, more efficient bulk purchasing and leasing agreements for software and hardware; vendors have more power over software licenses because they better negotiators and because contractual pressure forces vendors to meet deadlines."

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