Crowd sourcing (5)
Crowdsourcing is a process through which a task, problem or project is solved and completed through a group of unofficial and geographically dispersed participants.
Crowdsourcing is a joint process development or problem-solving technique that requires help from a network of people, or crowd. This network is usually connected via the Internet or through a specific website.
Back sourcing (4)
Backsourcing can be a solution to problems that arise from the outsourcing agreement or from opportunities that arise from changes in the business situation (Veltri et al., 2008)." Backsourcing describes the process of when a firm recalls back in-house the services that it previously outsourced to another company.
The term is often used interchangeably with the term “insourcing”, although insourcing can refer to running a process “in-house” in general and not only to activities that had at some point been outsourced (Allen, 2006).
Keep in mind: Clearly identifiable implementation stages and potential risks and drawbacks.
IT operations and technology infrastructure are contracted to a number of vendors, usually in combination with some internally provided elements of information technology.
- because of economic and market globalization (2)
- (6) primarily a geographic activity. In the West, goods are expensive because the staff required to produce and distribute them are costly. In the developing world, by contrast, vast inexpensive labor pools provide an easy bedrock for a low-cost economy.
- relocating factories from costly countries to the cheaper economies
What is it
Lots of varieties:
- off shoring
- business process outsourcing (BPO)
- application service providers (ASPs)
- multi sourcing*
- crowd sourcing* (2)
- Gartner includes (1)
- utility services
- software as a service and
- cloud-enabled outsourcing
- IT outsourcing (as a part of an outsourcing definition) is the use of external service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes. (1)
- Outsourcing is about moving internal operations to a third-party (6)
- the use of external agents to perform one or more organizational activities (7)
- Develop right sourcing strategies & vision
- Select the right IT service providers,
- Structure the best possible contracts, and
- Govern deals for sustainable win-win relationships with external providers
- treated as a commodity (client centric view) by decision models like make-or-buy, always focused on costs and limited solutions
- when customer and supplier are more mature, the partnership should be established and outsourcing is treated on a basis of mutual interest with the adoption of more complex solutions in decision models like win-win.
- ITO motivations,
- ITO decisions
- ITO risks,
- debate around transaction cost theory,
- client–vendor relationship,
- the vendor’s perspective,
- psychological and formal contracts,
- opensourcing and crowdsourcing,
- offshore outsourcing, and
- to achieve cost reductions and access to high-quality IT services and skills
- strategic reasons even if their internal IS department could provide similar results as outsourcing vendors
- firms where IT is seen as core competencies
- eliminate the burden of internal IT functions and accelerate reengineering
- political reasons, e,g, to bypass political barriers that prevented the IS department from obtaining cost savings, or to solve internal conflicts
- cost saving is no longer the primary reason to outsource for some
- Clients are searching for more added-value and higher quality services from ITO vendors
If clients decide to discontinue the current ITO relationship,
- to outsource or not
- strategic perspective focusing on how to use the IT market to leverage business advantages
- economic perspective intending to find a balance between benefits and risks
- how to outsource
- strategically imperative in a dynamic business
- contribute to the success of
- applied by firms to decide which parts of IT functions should be outsourced and which should remain in-house
- quantitative methods
- e.g. analytic hierarchy process (AHP) method and the group decision-making approach
- selecting a suitable vendor
- evaluating vendor characteristics and capabilities - two-stage contract approach, which uses a pilot project to test the vendor capabilities before signing a formal contract
- several quantitative models, such as a game theory model, combinatorial optimization model and fuzzy VIKOR model have been employed to examine the selection decision under this two-stage framework.
- The AHP method has also been employed to assist small- and mediumsized enterprises in selecting vendors
- re-outsourcing decisions
current outsourcing contracts have to be renegotiated or terminated due to dissatisfactory outcomes or changed organizational and business environments
- strategic impact of outsourced activities and vendor substitutability
- switching costs
- prior relationships with vendors
- negative previous ITO outcomes, loss of control and the degradation of IS services
they may resort to backsourcing
- Why backsource?
- organizational change and industry change
- quality, service quality, relationship quality, and switching costs
- domestic ITO risks,
- offshore risks
- BPO risks
- ASP risks
Why outsource? (7)
- reducing costs,
- improving service quality and
- concentration on their core competencies