Outsource Report

Essay by cmdoUniversity, Master'sA-, November 2006

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Over the past few years, offshore outsourcing has taken a new meaning for the American economy. Outsourcing began decades ago in manufacturing and recently expand to include some of the most highly skill jobs especially in the Information Technology (IT) industry. McKinsey Global Institute estimates that eleven percent of the 1.56 billion service jobs worldwide could be outsourcing or performed remotely. MGI also projects that the total employment in the IT services sector will reach 6.8 million in 2008, and 770,000 jobs or thirteen percent will be performed offshore in developing and low-wage countries such as India, China, etc. (McKinsey Global Institute). However, the decision to move offshore is an incredibly charged question in today's market. There are many success or failure stories resulting from offshore outsourcing. This paper will discuss the problem that are facing companies who need to make the decision whether to offshore their business function.

In addition, this paper also discusses the statistics gathered from several consultant groups to provide a clearer picture of offshore outsourcing.

There are many goals for outsourcing information technology because of cost reduction, speed to market, and opportunities for new businesses. As of today, the statistical data demonstrates that about 15 percent of companies have already outsourced their IT business to other countries. More and more will follow. Experts (Forester Research) estimated that as of today, 473,000 American IT position have already been lost due to outsourcing. However, not all companies have benefited from offshore outsourcing. The main reason that those companies failed to achieve the end objective is that they underestimate of what it take to be a success. Companies naively launch offshore outsourcing strategies without an understanding of what it will take to be a success. Poorly planned outsourcing can raise expenses in other areas, and...