IT Outsourcing: Impacts and Challenges

This chapter provides both practitioner and academic insights into outsourcing. It begins with a review of the literature and practice of outsourcing, followed by a retrospect of its developments since the 1960s, up to present-day emergent trends such as best/smart-sourcing, rural-sourcing and business application grids. Recent legal developments are highlighted, along with their corresponding impacts. Outsourcing decisions tend to focus solely on the short-term benefits of cost reduction and service level improvement and, hence, often lack strategic direction, thus indicating the need for strategic management frameworks in the decision process. This chapter introduces a generic framework for such decision-making and highlights other strategic frameworks developed by researchers. The chapter then concludes by summarizing suggested action points that enable both clients and service providers to best exploit the recent developments in outsourcing, in order to maintain the strategic edge in an increasingly complex and competitive business environment.