This refers to the process of contracting computer center operations, telecommunications networks, or applications development to external vendors.
Reasons for outsourcing:
1. Cost Effective
Outsourcing if well initiated and managed could be more cost effective than maintaining an organization‘s computer center or information systems staff.
2. Outsourcing enables a company with fluctuating needs for computer processing to pay for only what it uses rather than build its own computer center, which would be underutilized when there is no peak load.
3. Outsourcing enables an organization to free up scarce and costly talent for activities with higher payback.
4. Outsourcing frees an organization‘s information systems staff of the task of keeping up with technological change or innovative practices. This thus eliminates associated training costs.
5. Outsourcing enables an organization with minimal/no human resources (IS staff) to perform systems development since it contracts the process of development to external vendors.
6. Outsourcing may mean getting quality, since the vendors outsourced to are usually specified in their field and thus they have the necessary expertise required to produce quality systems.