Insourcing (in-house development) - is a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems.
Outsourcing - is an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house.
Three different forms of outsourcing are :
1. onshore outsourcing - engaging another company within the same country for services.
2. nearshore outsourcing - contracting an outsourcing arrangement with a company in a nearby country. Often this country will share a border with a native country.
3. offshore outsourcing - using organizations from developing countries to write code and develop systems. In offshore outsourcing country is geographically far away.
Some of the influential drivers affecting the growth of the outsourcing market include :
=> core competencies.
=> financial savings.
=> rapid growth.
=> industry changes.
=> the internet.
Outsourcing Benefits :
1. Reduced operating expenses.
2. No costly outlay of capital funds.
3. Reduced time to market for product or services.
4. Reduced head count and associated overhead expense.
5. Increased quality and efficiency of a process, service, or function.
6. Access to outsourcing service provider's economies of scale.
Outsourcing Challenges :
=> Contract length.
=> Competitive edge.
=> Scope definition.