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What is Outsourcing?
Outsourcing is a business practice in which services or job functions are farmed out to a third party. In information technology, an outsourcing initiative with a technology provider can involve a range of operations, from the entirety of the IT function to discrete, easily defined components, such as disaster recovery, network services, software development or QA testing.
Companies may choose to outsource IT services onshore (within their own country), nearshore (to a neighboring country or one in the same time zone), or offshore (to a more distant country). Nearshore and offshore outsourcing have traditionally been pursued to save costs.
We deliver the high-quality staff you need to support your business and drive innovation. Whether you’re looking to fill long-term positions or short-term projects, we’ll supply the ideal candidate for the job.
Our proven methodology for finding the most talented resource for a job has proven to be a valuable skill for both our clients and for our own internal needs. Our executive search methodology identifies middle to upper managers and specialists in specific fields.
The first step in a successful search assignment is to understand our client’s aims and to learn about their company, the corporate culture, and their needs and expectations. This serves as the starting point for our candidate searches.
Using our custom techniques, we analyze the personal and professional background of the candidates, and present the best qualified ones to our client. After successfully placing the new employee, we can also develop recommendations for his / her integration to the new job and provide different levels of executive coaching.
Outsourcing benefits and costs
THE BUSINESS CASE FOR OUTSOURCING VARIES BY SITUATION, BUT THE BENEFITS OF OUTSOURCING OFTEN INCLUDE ONE OR MORE OF THE FOLLOWING:
Lower costs (due to economies of scale or lower labor rates)
Increased focus on strategy / core competencies
Access to skills or resources
Increased flexibility to meet changing business and commercial conditions
Accelerated time to market
Lower ongoing investment in internal infrastructure
Access to innovation, intellectual property, and thought leadership
Possible cash influx resulting from transfer of assets to the new provider
Some of the risks of outsourcing include:
SLOWER TURNAROUND TIME
LACK OF BUSINESS OR DOMAIN KNOWLEDGE
LANGUAGE AND CULTURAL BARRIERS
TIME ZONE DIFFERENCES
LACK OF CONTROL
Outsourcing IT functions
Traditionally, outsourced IT functions have fallen into one of two categories: infrastructure outsourcing and application outsourcing. Infrastructure outsourcing can include service desk capabilities, data center outsourcing, network services, managed security operations, or overall infrastructure management.
Application outsourcing may include new application development, legacy system maintenance, testing and QA services, and packaged software implementation and management. In today’s cloud-enabled world, however, IT outsourcing can also include relationships with providers of software-, infrastructure-, and platforms-as-a-service.
In fact, cloud services account for as much as one third of the outsourcing market, a share that is destined to grow. These services are increasingly offered not only by traditional outsourcing providers but by global and niche software vendors or even industrial companies offering technology-enabled services.
Outsourcing and jobs
The term outsourcing is often used interchangeably — and incorrectly — with offshoring, usually by those in a heated debate. But offshoring (or, more accurately, offshore outsourcing) is a subset of outsourcing wherein a company outsources services to a third party in a country other than the one in which the client company is based, typically to take advantage of lower labor costs. This subject continues to be charged politically because unlike domestic outsourcing, in which employees often have the opportunity to keep their jobs and transfer to the outsourcer, offshore outsourcing is more likely to result in layoffs.
Estimates of jobs displaced or jobs created due to offshoring tend to vary widely due to lack of reliable data, which makes it challenging to assess the net effect on IT jobs. In some cases, global companies set up their own captive offshore IT service centers to to reduce costs or access skills that may not result in net job loss but will shift jobs to overseas locations.
Some roles typically offshored include software development, application support and management, maintenance, testing, help desk/technical support, database development or management, and infrastructure support.
In recent years, IT service providers have begun increasing investments in IT delivery centers in the U.S. with North American locations accounting for more the a third of new delivery sites (29 out of a total of 76) established by service providers in 2016, according to a report from Everest Group, an IT and business sourcing consultancy and research firm.
Demand for digital transformation–related technologies specifically is driving interest in certain metropolitan areas. Offshore outsourcing providers have also increased their hiring of U.S. IT professionals to gird against potential increased restrictions on the H-1B visas they use to bring offshore workers to the U.S. to work on client sites.Some industry experts point out that increased automation and robotic capabilities may actually eliminate more IT jobs than offshore outsourcing.