Chapter 12, Problem 1DQ

List five reasons why organizations outsource. When should an organization choose not to outsource? Why are some organizations moving their software development work back in-house? Why are some organizations beginning to use onshoring?

Explanation of Solution

Reasons to outsource:

• To reduce fixed costs and capital investment as approaching other companies to do work helps in reducing initial inflow requirement to the project.
• Improve accountability as a good contract helps reduce the risk of the company but reduce the daily requirements of supervision.
• Focussing on core competency of the business. It might not be the more added value of the company. For example, a company can outsource manufacturing process while focussing on the design part.
• Ensuring flexibility of operations to vary staff, production requirement easily as per demand.
• Accessing expertise in skill and technology. Approaching expert professionals and organizations will only help to improve efficiency and results.

Explanation of Solution

Reasons for not to outsource:

• Companies might need more control over a project, this monitoring might not be applicable in outsourcing.
• Dependency over an external company can affect their performance. So, companies might avoid that.
• The information might be of strategic importance and provide a competitive advantage. This cannot be shared with other companies in the market.

Explanation of Solution

Reasons for organizations to move back IT projects in-house:

• IT projects can be seen as services that be placed along with core activities.
• If the organization is ahead of competitors in the market, software development can be moved in-house.

Explanation of Solution

Reasons to use on-shoring:

• It contributes to the development of economy and ensuring improvement in investments and job opportunities in the local level.
• It provides opportunity for better collaboration.
• Also reduces the cost of operation and ensure low-cost of resources.