Comm 190 Week 10
Working Session for Comm 190 Project
Chapter 11 Q7
What is outsourcing, and What are Application Service Providers?
Outsourcing is the process of hiring another organization to perform a service.
Any business activity in the value chain can be outsourced, from marketing and sales to logistics,
manufacturing, or customer service. The vendor can be domestic or international. When a
vendor is overseas, outsourcing is referred to as offshoring. Offshoring experience has shown
that establishing clear requirements is the key to providing success in an offshoring agreement.
Outsourcing can be an easy way to gain expertise. E.g. an organization wants to upgrade its
thousands of user computers on a cost-effective basis. To do so, the organization would need to
develop expertise in automated software installation, unattended installations, remote support,
and other measures that can be used to improve the efficiency of software management. The
organization might choose to hire a specialist company to perform this service since it is
expensive and is not part of the company's strategic direction.
Other reasons to outsource:
-reduce development risk(can put a cap on financial risk by setting specific prices on components
of the system; can reduce risk by ensuring a certain level of quality or avoiding the risk of having
-reduce implementation risk (reduce picking the wrong software, using the wrong network
protocol, or implementing incorrectly)
Risks to outsourcing:
1. Loss of control:
-vendor in driver's seat
-potential loss of intellectual capital
-product fixes, enhancements in wrong priority
-vendor management, direction, or identity