PhD Dissertation on Outsourcing

Outsourcing can be defined as use of external resources (where external resources are businesses outside the organizational boundary) to perform activities/tasks traditionally managed by internal staff and resources. The process involves restructuring of the organizational processes, re-defining its boundaries and its outside relationships.

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Outsourcing can be grouped into two broad categories; Tactical and Strategic. Tactical outsourcing is carried out to meet short term business requirements, where such requirements are either seasonal or unexpected due to sudden surge/fall in the market demand. It does not usually constitute to the strategic business objectives and is done to provide temporary relief from the bottleneck issues.

Strategic outsourcing on the other hand forms part of the long term strategic business goals, where each activity is thoroughly planned and closely monitored. Such activity involves long term steady relationship(s) with outer businesses, usually with strategic partners where dependencies already exist within the business or where the services cannot be introduced without specific technological facilities.

The reasons organizations outsource vary according to the nature and state of the business and the environment surrounding them. Such decisions are usually aimed at:

1) Cost saving

2) Access to new skill sets / technology

3) Improve quality of service

4) Facilitate speed/service to market and

5) Short term business objectives

IS outsourcing originates from the professional and facility management services of the 1960's and 1970's in the areas of financial and operations support. In the 70's and 80's application packages, contract programming and specific processing services were the main IS outsourcing. In the 90's companies outsource their IS function through enterprise-wide system integration application development and systems operations.

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