Resources on Software Outsourcing

Software Outsourcing

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

Software

Software fundamentally is the unique image or representation of physical or material alignment that constitutes configuration to or functional identity of a machine, usually a computer. As a content of memory, software in principle can be changed without the adjustment to the static paradigm of the hardware thus without the remanufacturing thereof. Commonly software is of an algorithmic form which translates into being to a sequence of machine instructions. Some software, however, is of a relational form which translates into being the map of a realization network (see VHDL).

Software is a program that enables a computer to perform a specific task, as opposed to the physical components of the system (hardware). This includes application software such as a word processor, which enables a user to perform a task, and system software such as an operating system, which enables other software to run properly, by interfacing with hardware and with other software.

The term "software" was first used in this sense by John W. Tukey in 1957. In computer science and software engineering, computer software is all computer programs. The concept of reading different sequences of instructions into the memory of a device to control computations was invented by Charles Babbage as part of his difference engine. The theory that is the basis for most modern software was first proposed by Alan Turing in his 1935 essay Computable numbers with an application to the Entscheidungsproblem.

Excerpt from "Computer software." Wikipedia, The Free Encyclopedia. 25 Oct 2006, 12:59 UTC. Wikimedia Foundation, Inc. 27 Oct 2006 http://en.wikipedia.org/w/index.php?title=Computer_software&oldid=83627420