Presentation is loading. Please wait.

Presentation is loading. Please wait.

McGraw-Hill/Irwin © The McGraw-Hill Companies, All Rights Reserved CHAPTER 19 Outsourcing in the 21 st Century.

Similar presentations


Presentation on theme: "McGraw-Hill/Irwin © The McGraw-Hill Companies, All Rights Reserved CHAPTER 19 Outsourcing in the 21 st Century."— Presentation transcript:

1 McGraw-Hill/Irwin © The McGraw-Hill Companies, All Rights Reserved CHAPTER 19 Outsourcing in the 21 st Century

2 19-2 Learning Outcomes 19.1 Describe the advantages and disadvantages of insourcing, outsourcing, and offshore outsourcing 19.2 Describe why outsourcing is a critical business decision

3 19-3 OUTSOURCING PROJECTS Insourcing (in-house-development) – a common approach using the professional expertise within an organization to develop and maintain the organization's information technology systems Outsourcing – an arrangement by which one organization provides a service or services for another organization that chooses not to perform them in-house

4 19-4 OUTSOURCING PROJECTS

5 19-5 OUTSOURCING PROJECTS Reasons companies outsource

6 19-6 OUTSOURCING PROJECTS Onshore outsourcing – engaging another company within the same country for services Nearshore outsourcing – contracting an outsourcing arrangement with a company in a nearby country Offshore outsourcing – using organizations from developing countries to write code and develop systems

7 19-7 OUTSOURCING PROJECTS Big selling point for offshore outsourcing inexpensive good work

8 19-8 OUTSOURCING PROJECTS Factors driving outsourcing growth include: –Core competencies –Financial savings –Rapid growth –Industry changes –The Internet –Globalization

9 19-9 OUTSOURCING PROJECTS According to PricewaterhouseCoopers Businesses that outsource are growing faster, larger, and more profitable than those that do not

10 19-10 OUTSOURCING PROJECTS Most organizations outsource their noncore business functions, such as payroll and IT

11 19-11 Outsourcing Benefits Outsourcing benefits include: –Increased quality and efficiency –Reduced operating expenses –Outsourcing non-core processes –Reduced exposure to risk –Economies of scale, expertise, and best practices –Access to advanced technologies –Increased flexibility –Avoid costly outlay of capital funds –Reduced headcount and associated overhead expense –Reduced time to market for products or services

12 19-12 Outsourcing Challenges Outsourcing challenges include –Contract length 1.Difficulties in getting out of a contract 2.Problems in foreseeing future needs 3.Problems in reforming an internal IT department after the contract is finished –Competitive edge –Confidentiality –Scope definition

13 19-13 CHAPTER NINETEEN Opening Case Study Questions 1.What are the benefits and risks associated with outsourcing? 2.What are the ethical issues associated with outsourcing government applications? 3.What are the security issues associated with outsourcing government applications?

14 19-14 CHAPTER NINETEEN CASE UPS in the Computer Repair Business Toshiba is handing over its entire laptop repair operation to UPS Supply Chain Solutions, the shippers $2.4 billion logistics outsourcing division

15 19-15 CHAPTER NINETEEN CASE QUESTIONS 1.Do you think UPSs entrance into the laptop repair business was a good business decision? Why or why not? 2.Explain why Toshiba decided to outsource its computer repair business to UPS 3.What are some advantages UPS can offer Toshiba in the outsourcing arrangement? 4.Explain the advantages of forming an outsourcing relationship with a parcel delivery company such as UPS


Download ppt "McGraw-Hill/Irwin © The McGraw-Hill Companies, All Rights Reserved CHAPTER 19 Outsourcing in the 21 st Century."

Similar presentations


Ads by Google