IT OutSourcing Evolution Past Present and Future Critique
By Jae-Nam Lee, Minh Q. Huynh,
Ron Chi-Wai Kwok, and Shih-Ming Pi
May 2003/Vol. 46, No. 5 COMMUNICATIONS OF THE ACM
Submitted by Bhavani Prasad Sangannagari
Student ID 990 02 0777
The paper analysis about the past current and future market trends in IT outsourcing. It recognizes the current objective of IT industry is to manage available information resources with maximum flexibility and control with the help of external service providers. The paper compares and contracts the flow of IT outsourcing right from the period of 1960’s. In the period of 1960’s, computing cycles were expensive with huge non-portable computing machines and hence most of the outsourcing was through services and Facility management. With the arrival of minicomputers in 1980’s system and application software packages gained importance and processing services almost died. During this time IT was considered as an in house function. In the period of 1990’s network and telecom management, distributed systems, application development, etc gained recognition that once again increased IT outsourcing but this with the shift towards vendors instead of customers. Due to intangible elements or difficulties with leased contracts for outsourcing, partnership in computer solutions industry is now becoming prevalent. During the current period, success business stories with effective partnerships among organizations became popular thereby achieving the best integration of Economic, Social and strategic perspectives. In the future, the author indicates outsourcing in the era of e-commerce as application service provider (ASP).
Strategies followed by the organizations have changed with time for outsourcing. Make or buy based on core competence strategy that was used in past years has now became upside down with a contract based partnership strategy for acquits ion of services or products. Organizations based their concentration over improving efficiency and effectiveness of management instead of technical support. Majority of the development sites shifted from off shore to on site. In the near future ASP’s provide packaged software applications developed by software application developers, system implementation and integration by system integrators, etc, thereby achieving faster time to market, IT expertise, and low cost.
Potential loss of qualified personnel, control over the projects, etc gets affected due to outsourcing. Several debates on the issue of outsourcing balance it in terms of efficiency, user and business satisfaction, service quality and cost reduction, etc. Even then no research was able to determine the exact recipe for outsourcing. In order to gain an integrated advantage of social, economic and strategy advantage most of the organization fail to consider environment structural, relationships among them. The system of application service provider in the near future has its own drawbacks like the whole system can shutdown the critical operations and result in major loss of client productivity. System incompatibility can complicate the integration between the client and its ASP. Also the system security and trust issues further complicate sharing of data.
By reading the paper some of the interesting points can be deduced like over the period of time trends in IT outsourcing got reversed and still the market is undergoing several changes. Every time development in technology has forced these type of changes. Today’s application development is towards outsourcing of qualified professional’s. Inspite of all these projections, questions like will ever-exact metrics for measuring IT outsourcing be ever developed? What will be the trend in outsourcing after ASP’s in e-commerce era? Do really organizations are getting benefit and to what extent? remain some of them to be answered.