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Implications of Offshore
Outsourcing of Information Systems
Development”
Abstract:
The offshore outsourcing of information systems has become a most important
characteristic of the international IS field. This paper presents some basic concepts of
costs and benefits of offshore outsourcing and difficulties and risks of offshore
outsourcing. This paper also focuses on the findings from an ongoing research study
on future implication of offshore outsourcing of Information system development.
Introduction:
Outsourcing defined as the relocation of performance and processes which were
earlier perform internally to an exterior party. Nowadays Outsourcings are done by
both way domestically and internationally. If outsourcing done by internationally, it is
referred as offshore outsourcing. Basically it involves transfer of process, ownership
and location of the operations across national borders. (Hagel and Brown, 2005).
Firms’ primarily need to be offshore outsourcing is highly skilled professionals and
significant cost savings with decrease software development time. Outsourcing has
become an essential approach of the IS field and has practised a significant growth in
recent years and will continue in the near future. The decision to offshore relates more
to ownership considerations than the location considerations. For example, whether to
outsource or not to outsource involves consideration of ownership and where to
outsource from, this involves considerations of appropriate locations (Chadee and
Raman, 2009). Offshore outsourcing offers intentional advantages and cost benefits
IS/IT development. Outsourcing relationships also involve risks for clients and
service provider as well. The object of this essay is to explain the advantages and risks
and future practice of offshore outsourcing in IS development.
Quality is another important factor for offshore outsourcing. The ideal outsourcing
country should provide high-quality work and IT infrastructure at low prices and
guarantees international quality standards. Offshore outsourcing is not only beneficial
for cost benefits from lower salaries, but companies can focus more on their core
competences and activities in their fast paced domestic and international markets by
outsourcing to a highly skilled, readily available labour force overseas. Khan et al
(2003) focuses on the different perspective of offshore outsourcing which is round the
clock service. Time saving is one more reason for outsourcing some of the in-house
IS work to offshore outsourcers. Sometimes supplier is in another time zone to the
client. This situation gives the possibility of programming around 24 hrs a day in US
and 18 hrs a day for UK. Due to this time zone difference, if an error occurs in the
system it can be fixed overnight and the system can be fully available on the next day.
These can only happens if the supplier and customer have a good telecommunications
and infrastructure.
Conclusion:
Offshore outsourcing can be seen as a main strength in the recent post-dotcom period
of the global IT industry. It has totally altering all business models of IT-companies.
The outsourcing of IS/IT is the result of visible shifts in the strategy of multinational
firms from the diversification of production activities. Outsourcing is become more
viable for a larger number of firms because of widespread availability and use of more
affordable advanced information and communication technologies. Outsourcing of
professional services sets new trade in world economy. The gains from trade that take
place over the Internet or telephone lines are no different than the gains from trade in
physical goods transported by ship or plane. Now mostly all firms knows the benefits
of offshore outsourcing with simple logic which is, when a good or service is
produced at lower costs in another country, it is better to import it rather than to
produce it domestically. Even in future offshore outsourcing of IS/IT is growing
because of major advantages, firms will continue with offshore outsourcing to other
countries.
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