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.