Common and Complementary Approaches to Managing Information Technology Outsourcing

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IT Outsourcing
Over the last five years the percentage of global Information technology (IT) budgets that have been allocated to IT outsourcing has progressively grown to 23% of total budgets as of the close of the latest calendar year. This continual reliance on IT outsourcing is fueled by not only cost, but also the ability to create new software applications faster, reduce time-to-market by attaining external expertise critical to a new projects quicker, and the ability to keep valuable internal resources focused on the most strategically critical projects (Rosebush, Leavell, Maniam, 2012). IT outsourcing, contrary to widespread public opinion, is not about chasing the lowest cost per labor hour around the world to have programming completed or routine maintenance of applications done (Khan, Niazi, Ahmad, 2011). Best practices in IT outsourcing seek to create a competitive advantage through the alliances with outsourcing partners, while at the same time optimizing overall organizational performance (Ren, Ngai, Cho, 2011). As all outsourcing is inherently filled with risk, any due diligence to create an effective IT outsourcing framework must begin with a thorough definition of risk management guidelines and objectives, followed by the prudent definition of risk trade-offs as captured in the contracts and service level agreements (SLAs) (Wan, Wan, Zhang, 2010). All of these factors must be kept in balance with one another for any enterprise to gain the full

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