The recent article “Extreme Outsourcing” in CIO magazine (May 15th 2007) gives a nice summary of recent thinking in outsourcing.
The old way to think of outsourcing is a way to reduce costs and use cheap labor and outsource the entire projects.
Over the years providers and buyers fine tuned the process and the model has been stabilized, well understood,
World is flat, etc.
Functions (in large) are outsourced for decades, example payroll.
Physical equipments are outsourced – ASP’s and Data Centers
The recent trend is componentized outsourcing – everything is a service – For example, you need to manage databases,
applications as part of supporting an enterprise. Outsource it to the experts who do this most efficiently, maintain
high quality, leverage scale economies, flexible and scale.
The new way to evaluate a candidate for outsourcing is answering “What is the best way to do an IT function or process
without loosing competitive advantage”.
Even better, leverage outsourcing as a competitive advantage at micro function and process level.