Application Outsourcing is an outsourcing arrangement for a wide variety of application services including new development, legacy systems maintenance, offshore programming, management of packaged applications, and staff augmentation. While this form of outsourcing generally involves a transfer of staff, the use of the term has recently broadened to include arrangements where this is not the case, as in staff augmentation. It does not include system integration activities.
Application outsourcing services may include services related to the design, testing, release, or production of applications. An example of this type of service is the "application management outsourcing" service, which involves the ongoing management of applications. In application outsourcing services, businesses rely on the general model of outsourcing, which is to delegate application work to a third-party company, in order to avoid the burden of doing that work in-house. Some business people also refer to the outsourcing of business processes, such as accounting, as "application outsourcing," either because various software applications are used or because the term has become business jargon. Recent advances like cloud computing have made possible application outsourcing, which gives many businesses the option to delegate the work of building and working with applications to a range of third-party vendors and service providers. Vendors can utilize an "economy of scale" to specialize in certain application work that would be costly and burdensome for companies to source in-house. Modern Internet technologies like software as a service (SaaS) allow for more Web-delivered application handling and other kinds of third-party services.