An Introduction to IT Outsourcing
Outsourcing occurs when companies contract with other companies to perform a particular function. Companies seek to outsource jobs or projects to companies who are experts in that function or who can provide that function at a much lower cost relative to hiring personnel.
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Identification
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IT outsourcing involves the outsourcing of IT related functions such as website design and maintenance, data collection, database management and management information systems. Since information systems is an integral part of day-to-day operations, IT outsourcing is more complicated and involved when compared to outsourcing functions such as payroll.
History
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IT outsourcing started in the 1980s with companies liked EDS and IBM who ran large mainframe data centers and provided IT and computer outsourcing services to other companies. When the Internet came on the scene in the 1990s, Application Service Providers (ASP) surfaced and offered web-based outsourcing services. Today, the latest IT outsourcing trend is called "cloud computing."
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Advantages
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The advantages of IT outsourcing include the reduction of IT cost through not having to hire IT personnel, access to global world-class IT talent and saving on IT infrastructure cost. Some of the world-class talent includes professionals in India with master's degrees and Ph.ds who provide professional services at a fraction of the cost of their U.S counterparts.
Disadvantages
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Some disadvantages associated with IT outsourcing include the potential loss of control of a business function, lack of flexibility in service level and possible incompatibilities between corporate cultures. However, companies can minimize or eliminate these disadvantages by doing their due diligence and fact-finding prior to contracting.
Current Trends
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The latest trends in IT outsourcing is "cloud computing". Although cloud computing is the next evolution of ASPs for corporations, it is projected to eliminate or reduce the need for individual users to carry out bulky applications such as Microsoft Office applications on their laptops and desktops. Instead, individuals can access similar word-processing, spreadsheet and database applications over the Internet and store files there as well.
Major Players
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Some major players in the IT outsourcing industry is Accenture and SalesForce.com. Accenture provides IT consulting as well as IT outsourcing services to companies looking to outsource. Saleforce.com is well known for its leadership in cloud computing by providing "cloud-based" sales-force management and Customer Relationship Management (CRM) tools to companies over the Internet.
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References
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