What is Outsourcing?
Outsourcing is the transfer or delegation of the operation and day-to-day management of a business process to an external entity. Outsourcing always involves a considerable degree of two-way information exchange, co-ordination, and trust. Outsourcing is the act of obtaining services from an external firm.
Outsourcing can be done within the same country boundaries or by transferring the business process to another country, usually where salaries are markedly lower. The latter is also named offshore outsourcing.
Outsourcing can be done for an existing functionality within the company or for a new
Why Outsourcing?
There might be many reasons for outsourcing, but usually it’s a mixture of the following:
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Lower costs for a service / BPO operation and management
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No expertise in a certain domain
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No need to maintain permanent personnel for a variable load
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Increase employee satisfaction with higher value added jobs
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Focus on the core competencies
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Reduce infrastructure investments
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Expand operations to a different region
Types of Outsourced Services
Typically, there are two types of outsourced services, technology and business process. They each can be broken into the following areas.
Technology Services
Business Process Outsourcing
Outsourcing Dangers
We should start here with the article Avoid These Seven Deadly Dangers Of Outsourcing (http://www.articlealley.com/article_6282_15.html) published by Steve Mezak.
The author says that the capital danger is not to outsource, when all your competitors do. Except for very special situations, this means wasting money that you cannot afford to waste.
All the other dangers relate to:
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choosing the right partner
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starting with poor requirements
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not having a clear development methodology with clear deliverables
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not enforcing the quality
Generally, the geographic distance and poor communications between partners tend to magnify these dangers.
