To Outsource or not to Outsource?

According to Dun & Bradstreet's most recent Barometer of Global Outsourcing, outsourcing expenditures will top $1 trillion worldwide by year end 2000. These expenditures have doubled in just the past three years alone. North America leads in outsourcing spending, representing 39 percent of the global total, followed by Asia at 31 percent and Europe at 25 percent. [xi]

It is clear that many companies have already determined that outsourcing is the most efficient and cost-effective manner to implement systems of this nature. Cost is not the only concern. Technology, the environment and systems are changing faster than ever. Outsourcing meets the organization’s challenge to respond to new customer demands in real time, as they have implemented the system many times before, and therefore development and implementation issues have already been worked out. It is more of a “plug and play” solution.

Outsourcing has recently received a great push from the following factors:

 1.There is a severe lack of IT professionals in the US. Companies that focus on systems are more likely to attract and retain IT talent and use it on their clients’ behalf.

 2.The movement from client-server applications to web-enabled/web-based systems is rapid.

3.The Internet itself is becoming more ubiquitous and robust. Solutions can be delivered without regard to time or location.

4.Start-ups can take advantage of outsourcing, as they can get up and running for a lower cost and in a faster time.

5.Middle-sized companies can take advantage of solutions previously available only to very large organizations.  [xii]

The Internet has, in the past 6 years, introduced great disruption in the business world. Telecommunications have become virtually free, connecting us all. The Internet has facilitated the creation of a truly global market, and the removal of time and distance constraints. Connectivity is now virtually instantaneous, and 24/7.  The Internet has also allowed access to the best training and education available for anyone, wherever they may be.  The incredible explosion of the Internet and the maturation of the technologies and infrastructure support collaborative SCM via web-based systems.