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ABC: An Introduction to Outsourcing

 

CIO

Everything you need to know to avoid the pitfalls of outsourcing.

Compiled by Stephanie Overby

What is outsourcing?

There are as many definitions of outsourcing as there are ways to screw it up. But at its most basic, outsourcing is simply the farming out of services to a third party. With regards to information technology, outsourcing can include anything from outsourcing all management of IT to an IBM or EDS to outsourcing a very small and easily defined service, such as disaster recovery or data storage, and everything in between.

The term outsourcing is often used interchangeably—and incorrectly—with offshoring, usually by those in a heated debate. But offshoring (or, more accurately, offshore outsourcing) is, in fact, a small but important subset of outsourcing wherein a company outsources services to a third party in a country other than the one in which the client company is based, primarily to take advantage of lower labor costs. This subject has proven to be a political hot potato (see Offshore Outsourcing: The Politics and Offshore Outsourcing: The People) because unlike domestic outsourcing, in which employees often have the opportunity to keep their jobs and transfer to the outsourcer, offshore outsourcing is more likely to result in layoffs.

Why outsource?

The business case for outsourcing varies by situation, but reasons for outsourcing often include one or more of the following:

  • lower costs (due to economies of scale or lower labor rates)
  • variable capacity
  • the ability to focus on core competencies by ridding yourself of peripheral ones
  • lack of in-house resources
  • getting work done more efficiently or effectively
  • increased flexibility to meet changing business and commercial conditions
  • tighter control of budget through predictable costs
  • lower ongoing investment in internal infrastructure
  • access to innovation and thought leadership

 
 
 
 
 
 
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More Information, More Records Management Options

Geoff Nesnow, Iron Mountain's senior manager of data protection market strategy, outlines some options and strategies for protecting everything from CRM data...
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The CIO's Guide to Mobile Security

As the use of mobile devices in organizations increases, so does the financial and legal risk...
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Successful Strategies for IP Business Communications

How to effectively utilize and manage your mobile workforce...
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CIO to Go: Making Large-Scale Outsourcing Work

Large-scale outsourcing deals promise big savings, but they fail half the time. Here's how to make them successful.  Read More »

 

So, You Want a Career in IT?

Listen as Frank Modruson, chief information officer, for Accenture shares insight and advice on successful careers in IT, recommendations on how to hire IT talent and how the role of the CIO is changing.  Read More »

 

How to get started with a service-oriented architecture

Listen to industry expert, BEA senior vice president Bruce Graham, a former chief information officer himself, share peer insights into how SOA can be implemented, who the key sponsors are and key challenges cio's might face moving forward with SOA.  Read More »

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More than ever, your organization needs to be focused on Business Continuity and Disaster Resiliency (BCDR).  Read More »

 

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