Outsourcing IT Functions

Paper Summary:

The paper emphasizes that only by adopting a strategic approach to offshore resources can companies minimize the overhead and maximize the savings and accomplish their strategies. The paper explains the three major strategies companies follow in order to get the best results from outsourcing, the three service delivery models available to companies pursuing offshore resources, and the factors that must be evaluated in order to define an offshore model. The paper also offers a brief history of outsourcing and overviews the advantages and disadvantages involved. The paper points out that, contrary to popular belief, the primary motivation in outsourcing is not the reduction in jobs or costs but the development of new strengths and core competencies within an organization.

Outline:
Introduction
Brief History of Outsourcing
Advantages and Disadvantages of Outsourcing
Summary

From the Paper:

"All companies are asking their IT departments to reduce IT costs and head count, and this is hitting white collar workers the hardest. These account for 19% of the IT budget by many industry sources, making them an attractive target for cost savings (AMR Research, 2003). However, rather than just cutting resources and doing without, many companies are lowering their costs by using offshore outsourced resources on a project-by-project basis. Although tactical, project-focused offshore outsourcing consistently saves companies money, increased project management costs, schedule delays, and project rework are common, creating project overhead and reducing savings by half. Only by adopting a strategic approach to offshore resources can companies minimize the overhead and maximize the savings and accomplish their strategies."

Sample of Sources Used:

• AMR Research (2003) - Offshore Outsourcing: Is It A Viable Approach for All Projects? Authors Laura Carrillo, Kathia Desronvil, Colleen Niven. AMR Research, Boston, MA. June 30, 2002. Accessed from the Internet on July 27, 2008.
• Benoit A Aubert, Guillaume Beaurivage, Anne-Marie Croteau, Suzanne Rivard. (2008). Firm strategic profile and IT outsourcing. Information Systems Frontiers, 10(2), 129-143. Retrieved July 30, 2008, from ABI/INFORM Global database. (Document ID: 1451821561).
• Nita Brooks (2006). Understanding IT outsourcing and its potential effects on IT Workers and their Environment. The Journal of Computer Information Systems, 46(4), 46-53. Retrieved July 29, 2008, from ABI/INFORM Global database. (Document ID: 1103867871).
• Economist (2006) - Virtual Champions, article from The Economist Magazine. June 1, 2006 print and online editions. Page 26.
• S E Goodman, Rob Ramer. (2007). Identify and Mitigate the Risks of Global IT Outsourcing. Journal of Global Information Technology Management, 10(4), 1-6. Retrieved July 29, 2008, from ABI/INFORM Global database. (Document ID: 1382170431).

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