The Outsourcing Dilemma

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Recommended: Advantages and disadvantages of global outsourcing

The Outsourcing Dilemma

CIS Strategic Planning

Introduction

To outsource or not to outsource, that is the question. It is indeed a question that a CIO, CEO, or IT manager is likely to encounter. It is not a simple question, nor is the answer simple, and there is not a one size fits all solution. As with any decision, it is good to face it with facts and without prejudice. This work shall discuss factors that help determine the answer, risks, benefits, cost analysis, and implications to the business.

Prevalence of outsourcing

How prevalent is outsourcing of IT function? Is it true that outsourcing in US companies primarily sends work to foreign countries? According to a Culpepper Compensation and Benefit Survey of 68 science and technology companies, 81 percent of companies surveyed outsource some IT function, while none of the companies did everything in-house and only 5 percent outsourced all IT function (Culpepper, 2007). The following table from the survey results shows the amount of domestic and foreign outsourcing (Culpepper).

This survey clearly indicates that outsourcing is prevalent, with prevalence to outsource to domestic service providers. The Gartner Group estimates that outsourcing will be a 50 billion dollar industry by the end of 2007 (Singh, 2006).

Outsourcing options

There are a variety of different outsourcing options available. Among these are software development, software support, hardware support, complete provision of an application and database environment, provision of server functionality only, provision of specific application capability, provision of business continuity functions, and provision of data backup and recovery functions. To further define outsourcing of software dev...

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...rcing as a means of automating a business.

References

Atkinson, Nigel (2005). Software Development Project Outsourcing. NeoWorks, Retrieved July 2, 2007, from http://www.neoworks.com/articles/outsourcing/Software%20outsourcing%20project%20optimisation.pdf

Culpepper, (2007). Compensation and Benefits Surveys. Retrieved July 2, 2007, from Culpepper Web site: http://www.culpepper.com/eBulletin/2007/AprilTrends.asp

external iT. Retrieved July 2, 2007, Web site: http://www.externalit.com/pricing.asp

Forbes, (2006). The Six Most Common Outsourcing Errors. Retrieved July 2, 2007, from Forbes Web site: http://www.forbes.com/work/2004/05/19/cx_jw_outsourceslide.html?thisSpeed=15000

Singh, Anil (2006). Managing the Risks When Outsourcing Offshore. Hanu Software, Retrieved July 2, 2007, from http://www.hanusoftware.com/html/brochure/Outsourcingwhitepaper.zip

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