Turning over responsibility of some or all of an organization's information systems applications and operations to an outside firm
Outsourcing Examples
A company that runs payroll applications for clients
A company that runs your applications at your site
Reasons to outsource
Cost-effective
Take advantage of economies of scale
Free up internal resources
Reduce time to market
Increase process efficiencies
System development is a non-core activity for the organization
Information Technology (IT) Services Firms
Help companies develop custom information systems for internal use.
Develop, host, and run applications for customers.
Provide other services.
Packaged Software Producers
Serve many market segments.
Provide software ranging from broad-based packages (i.e. general ledger) to niche packages (i.e. day care management).