What is outsourcing?

Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Outsourcing is a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations. Outsourcing can range from the large contract in which a company like IBM manages IT services for a company like Xerox to the practice of hiring contractors and temporary office workers on an individual basis.

 

A Deloitte survey shows that outsourcing drives about 60% of the entire services sourcing industry.

Outsourcing benefits:

    - cutting costs

    - reducing capital budgets

    - increasing efficiency

Is outsourcing the winning ticket?  

It is not that simple, but the short answer is no. For some companies, IT is a strategic field because of the rise of digitization, big data analytics and cognitive technologies. A company could rely on IT innovation, system design and architecture, and decision-oriented applications. Sometimes these are too critical to its success to outsource.

Here co-sourcing comes into play

Co-sourcing is a business practice where a service is performed by staff from inside an organization and also by an external service provider. It can be a service performed in concert with a client's existing internal audit department. The scope of work may focus on one or more aspects of the internal audit function. An example of co-sourcing is outsourcing part of software development or software maintenance activities to an external organization, while keeping part of the development in-house.

Co-sourcing benefits:

    - minimizing sourcing risks

    - increasing transparency and clarity

    - lending toward better control over the processes outsourced

References: 

1. McIlvaine, Andrew R. (March 16, 2008). "'Co-Sourcing' and More". Human Resources Executive Magazine. Retrieved May 23, 2012.

2. Khirallah, Diane Rezendes (September 2, 2002). "Out With 'Outsourcing' And In With 'Co-Sourcing'".Information Week Magazine. Retrieved May 23, 2012.

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