Resources on IT Outsourcing

Outsourcing IT

Outsourcing

Outsourcing entered the business and management lexicon during the 1990's and is often defined as the delegation of non-core operations from internal production to an external entity specializing in the managment of that operation. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of worldwide labor, capital, technology and resources. Though often used interchangeably, "outsourcing" differs from "offshoring" in that "outsourcing" is relative to the "restructuring" of the firm while "offshoring" is relative to the nation (see below).
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Benefits of outsourcing
The fact that many large businesses outsource and continue to outsource suggests that, in many cases, outsourcing is successful in that it increases product quality, lowers costs substantially, or both. Some economists have argued that outsourcing is a form of technological innovation analogous to machines on a car assembly line. Ford Motor Company relied heavily on workers in the past to assemble car parts. Today these workers are replaced by machines because they are cheaper in the long run, produce better quality products, or a combination of the two (the firm is trying to increase its quality to cost ratio, quality being defined by the consumer and inferred from revenue). Economists state that machines on the car assembly line must have a higher quality to cost ratio than workers because, if they didn't, there would be no incentive for the firm to replace workers with machines. Although workers’ jobs were lost from this replacement of workers with machines, the Ford Motor Company made more money by lowering costs (and increasing quality, thereby increasing revenue). Some argue that greater profits to the labor owners lead to higher consumption, which leads to further job creation, allowing those who lost jobs to gain jobs in other sectors of the economy. A firm's motivation for replacing workers with machines is identical to the motivation for outsourcing, i.e. the firm is trying to maximize the quality of its product given cost (its productivity). Because outsourcing allows for lower costs, even if quality reduces slightly or not at all, productivity increases, which benefits the economy in aggregate.

Professor Drezner reports that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. Drezner also points out that large software companies such as Microsoft and Oracle have increased outsourcing and used the savings for investment and larger domestic payrolls.

Likewise, outsourcing can present advantages to non-Western states. "Developing" countries, such as China or India, benefit from the patronage of companies that outsource to them - in terms of increased wages, job prestige, education and quality of life.

Excerpt from "Outsourcing." Wikipedia, The Free Encyclopedia. 28 Oct 2006, 02:11 UTC. Wikimedia Foundation, Inc. 28 Oct 2006 http://en.wikipedia.org/w/index.php?title=Outsourcing&oldid=84163144

Information Technology (IT)

Information Technology (IT) is concerned with the use of technology in managing and processing information, especially in large organizations.

In particular, IT deals with the use of electronic computers and computer software to convert, store, protect, process, transmit, and retrieve information. For that reason, computer professionals are often called IT specialists or Business Process Consultants, and the division of a company or university that deals with software technology is often called the IT department. Other names for the latter are information services (IS) or management information services (MIS), managed service providers (MSP).

In the United Kingdom education system, information technology was formally integrated into the school curriculum when the National Curriculum was devised. It was quickly realised that the work covered was useful in all subjects. With the arrival of the Internet and the broadband connections to all schools, the application of IT knowledge, skills and understanding in all subjects became a reality. This change in emphasis has resulted in a change of name from Information Technology to Information and Communication Technology (ICT). ICT in Education can be understood as the application of digital equipment to all aspects of teaching and learning. It is present in almost all schools and is of growing influence.

The growth of use of Information and Communications Technology and its tools in the field of Education has seen tremendous growth in the recent past. Technology has entered the classroom in a big way to become part of the teaching and learning process.

Excerpt from "Information technology." Wikipedia, The Free Encyclopedia. 24 Oct 2006, 02:11 UTC. Wikimedia Foundation, Inc. 28 Oct 2006 http://en.wikipedia.org/w/index.php?title=Information_technology&oldid=83338800