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Information Systems Outsourcing - Essay Example
The outsourcing of information systems and information technology enabled services in United States, Europe and Asia has experienced strong growth over the last several years due to an increasing need to focus on core competencies, heightened ERP and web implementation initiatives, consolidation across industries, insufficient operational expertise and a tight labor pool.
Outsourcing may be defined as the transfer of operational responsibility of either business processes or information system and other infrastructure management of an organization to an external service provider to achieve strategic goals, reduce costs, improve customer satisfaction and provide other efficiency and effectiveness improvements. This field has been in constant focus in last few years due to various social and financial issues involved with it.
A number of organizations have sub-contracted all or part of their information systems / information technology function to specialist consultancies / contractors. According to Forbes Over 90% of Fortune 500 companies have outsourced at least one major business function. Encouraged by the projections of phenomenal cost savings, many Fortune 500 firms are jumping on to the "outsourcing bandwagon" (Lacity and Hirschheim 1993b). A survey of U.S. CEOs shows that 42% of communication firms, 40% of computer manufacturers, and 37% of semiconductor companies rely on outsourcing from foreign firms. These same CEOs expect the figures on outsourcing to exceed 50% before the mid-1990s (Bettis et al. 1992).
Though the process of outsourcing is often considered as a non core business process it may range from low grade high volume ...