What is I.T outsourcing?

Outsourcing of IT processes - this may range from infrastructure, to software development, maintenance and support.

Outsourcing - is subcontracting a process, such as product design or manufacturing, to a third-party company.

The concept of taking internal company functions and paying an outside firm to handle them. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including telemessaging and call centers. Outsourcing is the wave of the future.

The definition of outsourcing, basically started in the late 80's, is certainly correct. frequently, the exact operations (people, equipment, etc.) were sold to an outside party to run. So in data processing for example, the entire computer department became owned/employed by say IBM who ran it at a fixed cost, or all accounting functions were taken over by an outside firm for a specified fee. It was thought the original company didn't have to deal w

ith employee issues, benefits, etc.

Advantages of Outsourcing

The benefits of outsourcing are:

Less capital expenditure - For example, by outsourcing information technology requirements, a company does not have to buy expensive hardware and software.

Less management headache - For example, by outsourcing business process such as accounting, a company no longer has to hire and manage accounting personnel.

Focus on core competencies - Outsourcing non-core related processes will allow a business to focus more on it's core competencies and strengths, giving it a competitive advantage.

Disadvantages of Outsourcing

Before deciding on outsourcing your company's business process, keep in mind the disadvantages of outsourcing:

Less managerial control - It may be harder to manage the outsourcing service provider as compared to managing your own employees.

Outsourcing company goes out of business - If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house.

May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to outsourcing.

Security and confidentiality issues - If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider.