Please read this information on IT sourcing strategies: Chapter 12.4 – "IT Sourcing and Cloud Strategy" (PowerPoint)Report on outsourcing and insourcing by Deloitte Consulting (Links to an external si
INFORMATION TECHNOLOGY SOURCING
Information Technology Sourcing
Harilakshmi Eda
Wilmington University
Summary of 1st Article
In the traditional era, companies used to manage technology in a simple manner. Suppose a program is needed for managing finances or inventory, it is purchased from one or two available vendors, remember at that time there was no stiff competition, along with licenses to operate on multiple systems. Even if it wanted to track sales online or know the consumer interests and market trends, for more efficient ordering and staffing, it is done easily but typically not without coaxing multiple systems to work well together or adding in after-market solutions. At times, the complexity of managing these systems is increased to some extent but it is within limits that could still generally be managed by an in-house team. However, with changing times, firms are using the same types of applications and programs at multiple instances to track all kinds of data and help their enterprises run efficiently. Same programs or multiple programs are added to the design to integrate properly and provide the best solutions. Here, ensuring each one of them continues to perform well with great efficiency is not always easy. Furthermore, the maintenance of these programs requires the assistance of various technical experts and it cannot be done by an in-house team at all. Moreover, today, there are countless applications with new changes bringing to them. Choosing the rights ones among them is difficult if not for the experts because any technology has its benefits and drawbacks and it depends on the company to choose the right fit one among them. Also, bringing so many experts on board is difficult for a firm as it increases costs. Yet, they need to run information technologies. And without IT, no company can run their operations these days. Therefore, the best solution people found is the Sourcing (Satyendra & Michael, 2006).
Sourcing is taking the assistance of an external information technology team or services. In other words, it is something that a firm gets from a provider. Or in other words, we can write that sourcing helps companies to get their work done by a different party and then submit the results to the company again. Here, there are different types of information technology outsourcing. They are (Satyendra & Michael, 2006).
Business process outsourcing (BPO)
E-outsourcing
In-sourcing
Multi-sourcing
Knowledge process outsourcing and
Selective outsourcing
Here, selecting a sourcing strategy depending on the situation and the company's goals is very important. The process of backend outsourcing would be the best one because it includes simple processes like data management, data entry, payroll and accounting. These tasks can be performed by normal people i.e., experts are not needed for the task. And outsourcing these processes saves time and energy for employees (Satyendra & Michael, 2006).
Summary of 2nd Article
Information technology sourcing is the trend in today’s world and it is going to continue in the future. IT Outsourcing refers to the strategic utilization of external IT resources. External resources are professionals or developers living in different geographical locations who work on a company’s task and deliver functions as per the requirement that is otherwise managed by internal resources. Application or software development, networking, web development, technical support, data centre management, data storage, security, etc, are some of the popular examples of outsourcing services. Companies outsource projects to companies that offer quality work for less cost. Some of the key benefits of outsourcing are (Juliana, 2012).
Focus better on core business activities
hire highly qualified professionals
Access to global resources
Reduced operational costs
Distribute risks
Increase efficiency for time-consuming tasks
With a dedicated development team, one can reduce time wastage and maximize flexibility. A firm can hire people for completing a task and when it is done, it can leave them, unlike the in-house employees who need to be paid regularly irrespective of tasks they get and do. The different types of outsourcing strategies are (Juliana, 2012).
Onshore Outsourcing
Referring to the name onshore, it means that companies choose third parties located in their home country even in the nearby region to handle their tasks. Onshoring is very promising because these are local companies and people are easily accessible, speak the same language, are in the same time zones and are easy to control (Juliana, 2012).
Nearshore Outsourcing
Nearshoring refers to handling tasks to professionals who are located in nearby countries to the home country. For example, a company in the US handles its operations to a firm in Canada, it is called nearshoring. They have close geographical proximity but come with high-cost differences (Juliana, 2012).
Offshore Outsourcing
Offshoring is the sourcing of tasks to countries that are far off from the main branch and the home country. For example, US companies offshore to Indian firms for their skilled experts and reduced wage costs. Here, Nearshoring would be the best strategy because it is easy to keep in touch with them and at the same avail benefits of reduced costs and environmental concerns (Juliana, 2012).
Reference
Juliana, Y., April, 2012, Information Systems and Technology Sourcing Strategies and Performance of E-Retailers. https://repository.asu.edu/attachments/93983/content//tmp/package-Gp0py1/Tsai_asu_0010E_11843.pdf
Satyendra, S., Michael, H, Z., March, 2006, Information technology outsourcing: Reducing costs or knowledge? https://warwick.ac.uk/fac/soc/wbs/conf/olkc/archive/olkc1/papers/109_singh.pdf