Outsourcing - Revision history

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 IT outsourcing clearly falls under the domain of the [[Chief Information Officer (CIO)|CIO]]. However, CIOs often will be asked to be involved in — or even oversee — non-ITO business process and knowledge process outsourcing efforts as well. CIOs are tapped not only because they often have developed skills in outsourcing, but also because business and knowledge process work being outsourced often goes hand in hand with IT systems and support.
 === Different Outsourcing Categories<ref>[https://www.chrisducker.com/how-outsourcing-works/ Different Outsourcing Categories Chris Ducker]</ref> ===
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 *Security also is an important factor in outsourcing. Many outsourcing relationships inevitably will involve the third party organization's access to sensitive business data, trade secrets, and other confidential information that is necessary to perform contracted functions.
 There may be some negative public relations impacts for companies when outsourcing results in the loss of a large number of jobs for workers in their local communities.

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 == See Also ==
-*[[Knowledge Process Outsourcing (KPO)]]
+*[[Knowledge Process Outsourcing (KPO)|Knowledge Process Outsourcing]]
 *[[Transition Methodology]]
-*[[IT Services (Information Technology Services)]]
+*[[IT Services (Information Technology Services)|IT Services]]
-*[[IT Strategy (Information Technology Strategy)]]
+*[[IT Strategy (Information Technology Strategy)|IT Strategy]]
 *[[IT Governance]]
 *[[Enterprise Architecture]]

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 == See Also ==
 *[[Knowledge Process Outsourcing (KPO)]]
 *[[IT Services (Information Technology Services)]]
 *[[IT Strategy (Information Technology Strategy)]]

← Older revision		Revision as of 15:14, 19 December 2022
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−	Outsourcing was first recognized as a [[business strategy]] in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the manufacturing sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of free-market economies on a global scale.<ref>[https://www.investopedia.com/terms/o/outsourcing.asp When was Outsourcing first recognized? Investopedia]</ref>	+	Outsourcing was first recognized as a [[Business Strategy\|business strategy]] in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the manufacturing sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of free-market economies on a global scale.<ref>[https://www.investopedia.com/terms/o/outsourcing.asp When was Outsourcing first recognized? Investopedia]</ref>

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 == What is Outsourcing? ==
-'''Outsourcing''' is a business practice in which services or job functions are farmed out to a third party. In information technology, an outsourcing initiative with a technology provider can involve a range of operations, from the entirety of the IT function to discrete, easily defined components, such as disaster recovery, network services, software development or QA testing. Companies may choose to outsource IT services onshore (within their own country), nearshore (to a neighboring country or one in the same time zone), or offshore (to a more distant country). Nearshore and offshore outsourcing have traditionally been pursued to save costs.<ref>Definition - What Does Outsourcing Mean? [http://storm-solutions.net.my/what-is-outsourcing/ Storm Solutions]</ref>
+'''Outsourcing''' is a business practice in which services or job functions are farmed out to a third party. In information technology, an outsourcing initiative with a technology provider can involve a range of operations, from the entirety of the IT function to discrete, easily defined components, such as disaster recovery, network services, software development or QA testing. Companies may choose to outsource IT services onshore (within their own country), nearshore (to a neighboring country or one in the same time zone), or offshore (to a more distant country). Nearshore and offshore outsourcing have traditionally been pursued to save costs.<ref>[http://storm-solutions.net.my/what-is-outsourcing/ Definition - What Does Outsourcing Mean? Storm Solutions]</ref>
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-Outsourcing was first recognized as a [[business strategy]] in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the manufacturing sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of free-market economies on a global scale.<ref>When was Outsourcing first recognized? [https://www.investopedia.com/terms/o/outsourcing.asp Investopedia]</ref>
+Outsourcing was first recognized as a [[business strategy]] in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the manufacturing sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of free-market economies on a global scale.<ref>[https://www.investopedia.com/terms/o/outsourcing.asp When was Outsourcing first recognized? Investopedia]</ref>
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-== The Importance and Risk of Outsourcing<ref>The Importance and Risk of Outsourcing [https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.800.2633&rep=rep1&type=pdf Roger Debreceny, Glen L. Gray]</ref> ==
+== The Importance and Risk of Outsourcing<ref>[https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.800.2633&rep=rep1&type=pdf The Importance and Risk of Outsourcing Roger Debreceny, Glen L. Gray]</ref> ==
 Outsourcing has been a feature of the IT landscape for at least three decades (Lacity et al. 2009). The most important reason for outsourcing is cost reduction (Blaskovich and Mintchik 2011; Lacity et al. 2009, 133), although other reasons include the need to improve process capability and business outcomes. Outsourcing brings risk to the enterprise from supplier credit risk; being locked in to a single vendor; loss of institutional knowledge; transfer of knowledge to the vendor; reduced internal controls; cultural differences between vendor and enterprise; and difficulty in managing business processes (Bahli and Rivard 2003; Lacity et al. 2009, 133). Outsourcing can also reduce risk by providing resources and capabilities that are beyond the financial and human resources of the enterprise. The level and type of outsourcing is also related to successful outcomes. High levels of outsourcing, for example, is associated with low success rates (Straub et al. 2008). As in many other areas of endeavor, the level of top management support is also associated with success (Iacovou and Nakatsu 2008) as is governance of programs and projects (Choudhury and Sabherwal 2003), and trust mechanisms in the outsourcing relationship (relational governance) (Langfield-Smith and Smith 2003; Poppo and Zenger 2002). The ability for outsourcing to affect enterprise IT capability has only been moderately researched. In the context of IT consulting, which can be seen as a light, human resources and strategic form of outsourcing, Nevo et al. (2007) shows that outsourcing positively impacts on overall capability when internal IT capability is weak.
-== Outsourcing Services<ref>Outsourcing Services [https://www.cio.com/article/2439495/outsourcing-outsourcing-definition-and-solutions.html cio.com]</ref> ==
+== Outsourcing Services<ref>[https://www.cio.com/article/2439495/outsourcing-outsourcing-definition-and-solutions.html Outsourcing Services cio.com]</ref> ==
 [[Business Process Outsourcing (BPO)]] is an overarching term for the outsourcing of a specific business process task, such as payroll. BPO is often divided into two categories: back-office BPO, which includes internal business functions such as billing or purchasing, and front-office BPO, which includes customer-related services such as marketing or tech support. Information technology outsourcing (ITO), therefore, is a subset of business process outsourcing.
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-=== Different Outsourcing Categories<ref>Different Outsourcing Categories [https://www.chrisducker.com/how-outsourcing-works/ Chris Ducker]</ref> ===
+=== Different Outsourcing Categories<ref>[https://www.chrisducker.com/how-outsourcing-works/ Different Outsourcing Categories Chris Ducker]</ref> ===
 These days most freelancers or outsourcing providers will fall into one of the following categories, in regard to the services that they provide their clients. Some will even offer several of these:
 *Inbound Customer Service
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-== History of Outsourcing<ref>History of Outsourcing [https://en.wikipedia.org/wiki/Outsourcing Wikipedia]</ref> ==
+== History of Outsourcing<ref>[https://en.wikipedia.org/wiki/Outsourcing History of Outsourcing -Wikipedia]</ref> ==
 ''20th Century''<br />
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-== Why Companies Outsource<ref>Why do companies outsource? [https://medium.com/coderslink/what-is-outsourcing-what-does-it-mean-for-companies-eff73fe60372 Jesus Lopez]</ref> ==
+== Why Companies Outsource<ref>[https://medium.com/coderslink/what-is-outsourcing-what-does-it-mean-for-companies-eff73fe60372 Why do companies outsource? Jesus Lopez]</ref> ==
 The simplest way to put it is that companies outsource because it reduces their overhead to produce a product, thus increasing their profit margins. It’s purely a business decision.
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-=== To Outsource or not to Outsource<ref>To Outsource or not to Outsource [https://www.shopify.com/encyclopedia/outsourcing Shopify]</ref> ===
+=== To Outsource or not to Outsource<ref>[https://www.shopify.com/encyclopedia/outsourcing To Outsource or not to Outsource -Shopify]</ref> ===
 Outsourcing only makes sense when the cost to buy goods or services from an outside vendor is much lower than the cost to deliver the service or manufacture the product in-house. However, many companies have discovered that cost is not the only consideration when evaluating outsourcing as a strategy.
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-=== Requirements for Successful Outsourcing<ref>Requirements for Successful Outsourcing [https://www.thebalance.com/why-do-companies-outsource-2553035 the balance]</ref> ===
+=== Requirements for Successful Outsourcing<ref>[https://www.thebalance.com/why-do-companies-outsource-2553035 Requirements for Successful Outsourcing-the balance]</ref> ===
 Critical aspects of a successful outsourcing program include:
 *Clear goals, visions, and plans
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-== Advantages and Disadvantages of Outsourcing<ref>Advantages and Disadvantages of Outsourcing [https://www.thebalancesmb.com/what-is-outsourcing-2533662 the balance small business]</ref> ==
+== Advantages and Disadvantages of Outsourcing<ref>[https://www.thebalancesmb.com/what-is-outsourcing-2533662 Advantages and Disadvantages of Outsourcing-the balance small business]</ref> ==
 ''Advantages''<br />

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 == Advantages and Disadvantages of Outsourcing<ref>Advantages and Disadvantages of Outsourcing [https://www.thebalancesmb.com/what-is-outsourcing-2533662 the balance small business]</ref> ==
 ''Advantages''<br />
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 *The noncore functions that a firm outsources will usually go to outside organizations for whom those functions are a core business competency, further benefiting the business through the improved management of those functions.
 *A company also may benefit from outsourcing by avoiding government regulations or mandates, such as environmental regulations or safety regulations and requirements.
 ''Disadvantages''<br />

← Older revision		Revision as of 16:22, 11 November 2021
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	Outsourcing was first recognized as a [[Business Strategy\|business strategy]] in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the [[manufacturing]] sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of free-market economies on a global scale.<ref>When was Outsourcing first recognized? [https://www.investopedia.com/terms/o/outsourcing.asp Investopedia]</ref>		Outsourcing was first recognized as a [[Business Strategy\|business strategy]] in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the [[manufacturing]] sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of free-market economies on a global scale.<ref>When was Outsourcing first recognized? [https://www.investopedia.com/terms/o/outsourcing.asp Investopedia]</ref>
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 '''Outsourcing''' is a [[business]] practice in which services or job functions are farmed out to a third party. In [[Information Technology (IT)|information technology]], an outsourcing initiative with a technology provider can involve a range of operations, from the entirety of the IT function to discrete, easily defined components, such as [[disaster recovery]], [[network]] services, [[software]] development or [[Quality Assurance (QA)|QA]] testing. Companies may choose to outsource IT services onshore (within their own country), nearshore (to a neighboring country or one in the same time zone), or offshore (to a more distant country). Nearshore and offshore outsourcing have traditionally been pursued to save costs.<ref>Definition - What Does Outsourcing Mean? [http://storm-solutions.net.my/what-is-outsourcing/ Storm Solutions]</ref>
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-Outsourcing was first recognized as a [[Business Strategy|business strategy]] in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the [[manufacturing]] sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of free-[[market]] economies on a global scale.<ref>When was Outsourcing first recognized? [https://www.investopedia.com/terms/o/outsourcing.asp Investopedia]</ref>
+Outsourcing was first recognized as a [[Business Strategy|business strategy]] in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the [[manufacturing]] sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of free-market economies on a global scale.<ref>When was Outsourcing first recognized? [https://www.investopedia.com/terms/o/outsourcing.asp Investopedia]</ref>
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 Although offshoring initially focused on manufacturing, white-collar offshoring/outsourcing has grown rapidly since the early 21st century. The digital workforce of countries like India and China are only paid a fraction of what would be minimum wage in the US. On average, software engineers are getting paid between 250,000 and 1,500,000 rupees (US$4,000 to US$23,000) in India as opposed to $40,000–$100,000 in countries such as the US and Canada. Closer to the US, Costa Rica has become a big source for the advantages of a highly educated labor force, a large bilingual population, stable democratic government, and similar time zones with the United States. It takes only a few hours to travel between Costa Rica and the US. Companies such as Intel, Procter & Gamble, HP, Gensler, Amazon and Bank of America have big operations in Costa Rica.
-Unlike outsourced manufacturing, outsourced white collar workers can choose their working hours, and for which companies to work. Clients benefit from telecommuting, reduced office space, management salary, and [[employee]] benefits as these individuals are contracted workers. However, ending a government oursourcing arrangement has its difficulties too.
+Unlike outsourced manufacturing, outsourced white collar workers can choose their working hours, and for which companies to work. Clients benefit from telecommuting, reduced office space, management salary, and [[employee]] benefits as these individuals are contracted workers. However, ending a government outsourcing arrangement has its difficulties too.
 ''Reasons for outsourcing''<br />