IT Outsourcing

26 Pages 6423 Words

1.Terms of Reference






















2. Introduction
Outsourcing occurs when a function of a company which was traditionally conducted internally, is instead completed by a 3rd party. Historically, areas such as catering and cleaning were handed over to an external provider, as they were not considered to be as important or as business critical as other activities. Today however areas such as IT, PR and HR are all being outsourced, due to the rapid changes in technology and the supposed benefits of outsourcing. Outsourcing allows business to keep abreast of changes in technology without the need to invest directly in the expertise and infrastructure themselves. Information technology outsourcing is the act of subcontracting all or parts of the IT function to an external vendor as an alternative to relying solely on in-house resources and capabilities.
2.1Background
The 1990’s witnessed the growth and maturing of the IT outsourcing market ( Currie,W 2000).However business have been using outsourcing since the early 1960’s. The concept started with Ross Perot when he founded Electronic Data Systems in 1963, which began when he was performing data processing services for Frito Lay and Blue Cross. He later left the company and founded Perot systems with a similar ethos. Today IT outsourcing has changed dramatically from these earlier arrangements. The difference lies in the operational, technical and financial sophistication of outsourcing vendors and the possibility of their offerings.
“IT outsourcing is increasingly being viewed more as a strategic, company – wide initiative and less as an operational IT issue. According to International Data Corporation (IDC), spending on IT outsourcing, which excludes hardware, business process management and consultancy services, g...