In today's global economy, the outsourcing of software development work to offshore jurisdictions is a strategic tool that can provide a competitive advantage for many companies. In addition to the main goal of cost savings, outsourcing can also development technologies, provide access to world class expertise , and allows a corporation to focus on its business activities and core competencies. According to Barney (1986), competitive advantage can be attained if the current strategy is value-creating. The competitive advantage is the strategic scope of every organization is to gain the competitive advantage over competitors and the outcome of effective and efficient strategy. Therefore, the source of competitive advantage cannot be imitated by competitors in the future.
IT Outsourcing is as an act of delegating or transferring some or all of the IT related decision making rights, business processes, internal activities, and services to external providers, who develop, manage, and administer these activities in accordance with agreed upon deliverables, performance standards and outputs, as set forth in the contractual agreement (Dhar, Gangurde, & Sridar, 2004).
Get access to skilled expertise to focus on company core mission
One of the primary reasons why a business may want to outsource a task is when it requires skilled expertise to allow company to focus on a corporation on its core competencies and business activities. That is to focus on core mission in providing a high quality product and service to their customer. This is what company makes sense of offshoring the task to people can perform it better. Moreover, company also only spend less on employee training's and save precious man-hours and will cut costs as well. In ...
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...lows that there is no areas should be or can be the source of competitive advantages that uniquely. Once the third party their no longer be a unique but shared. They will also be designed for the lowest cost while still meeting an agreed standards of service. This mean, outsource elements that the rich to suppliers who can delivering the same output at a lower cost.
When the companies outsource services like call centre, medical billing, teleradiology and so on to a low-cost country like Philippines or India, the companies are getting access to quality services that are offered at a much lower cost. Therefore, companies business can save up to 60% costs. Moreover, outsourcing has helped American companies deal with the destructive forces of globalization. Therefore, its the seriousness of competition and the price and profit erosion of associated with it.