Advantages of Outsourcing Technology - Essay Example

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The author of the paper states that outsourcing IT can provide major cost and time saving advantages over a range of projects from small things such as repair of hardware or network maintenance to ongoing management of all IT issues for multiple sites and users. …
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Advantages of Outsourcing Technology
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Download file to see previous pages Due to rapid changes in IT, it is challenging for both large and small businesses to remain technologically current. Outsourcing IT can help with this process, as illustrated by the proliferation of application service providers (aSPs) in the past five years. Clearly, the growth of the Internet has created forces that are driving companies to outsource (Jones, 2000), including highly competitive global markets and the rise of e-business. These trends compel companies to reorganize and utilize more outsourcing to gain higher e-business capacity, make predictable cost forecasts and cost reductions, attain well-defined and consistent service levels, acquire needed skills and expertise, gain access to best practices, and focus on core competencies.
The Goal: optimal outsourcing Traditional outsourcing focuses on achieving higher performance, greater flexibility, and reduced costs. Outsourcing IT offers the possibility of imposing control on the process, allows the conversion of fixed costs into variable costs, creates the opportunity for increased profitability, and fosters innovative capabilities and expanded flexibility (Quinn, 2000). IT has been identified as one of the most costly components of a business (Barthelemy, 2001), so options for reducing costs are certainly worth considering.
For a number of reasons, outsourcing IT cannot be approached like traditional make-or-buy decisions. To begin with, IT is not homogeneous because it is integrated with a wide variety of systems and activities. additionally, adjustments to standardized applications that accommodate the needs of a business unit or function are was often prohibitively expensive. Furthermore, estimating IT needs more than three years in advance is difficult, due to the rapid innovation. Consequently, a contract extending beyond three years may hinder the adoption of new technologies. ...Download file to see next pagesRead More
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