Introduction
Outsourcing can be defined as the sub contracting of any task, products or operations to a third party within a given duration of time in accordance with the contractual requirements. In most cases organizations usually outsource for products and services that it has the capability to produce using the available in-house resources (Burkholder, 2006). In addition, the services or products offered by the third party can be provided on-site or off-site depending on the cost effectiveness of the program. Decisions concerning whether to undertake outsourcing normally require a critical analysis of the benefits and disadvantages, with respect to the operational strategies of an organization. This entails a critical analysis of the efficiency of the in-house resources versus the effectiveness of subletting to a third party service provider (Bansal, 2004). This memo explains why the company should proceed to outsource its application development project (to a third party service provider) and should NOT rely solely on their in-house application development team.
Benefits to the company associated with outsourcing of the application development project
In the present business environment, it is almost impossible for a business enterprise to meet all its needs by itself, the viable solution that may seem appropriate at that instant is outsourcing. Although there are other strategies such as employee training, they are only effective in the long terms and come with high implementation costs, and have no guarantee that the Return on Investments is worth the undertaking. Business ventures may contract out for numerous reasons depending on the necessity of the impending projects. Irrespective of the approach to outsourcing, the fundamental causes behind outsourcing are universal to any business enterprise (Engardio, 2006). Despite the disadvantages associated with outsourcing such as quality issues, language barriers, competing problems, and management challenges, it is evident that outsourcing is a prime requirement for the company, especially with respect to its current application development.
The first reason why the company should outsource its application development project is that it allows the company to focus on the core business activities. This is because the company is currently experiencing a rapid growth, implying that the scales of its operations are bound to expand. The current application project development is subject to consume the company resources on the basis that its development serves the purpose of meeting the expansion needs of the company. In case the application development is undertaken using the in-house development team, the project will consume both human and capital resources of the company. Therefore, outsourcing the application development project will make the company to focus on other core business functions that are important to the continuity of the business without having an effect on the process of the application project development (Engardio, 2006). For example, if the application development requires a short period of time, the outsourcing the application project development is the most effective approach to be deployed instead on relying the in-house development team, which will consume a lot of capital and human resource towards the project, and the same time result in a shift in the attention of the business priorities.
The second reason for outsourcing the current application development project to a third party is because of the complex nature of the back-office operations at the company, in addition, the size of the company is a significant constraint in undertaking the application development project at a lower cost (Verhoef & Wijers, 2009). This makes outsourcing the most viable alternative of making sure that the application project development is cost effective. A typical scenario associated with this case is that the in-house development team has no ability to meet all the requirements of the application development. This makes outsourcing the most suitable strategy for the company in such a context basing on the argument that it fosters cost and efficiency savings (Verhoef & Wijers, 2009).
Currently, the expenses associated with performing a specific business process using the in-house staff is normally expensive, characterized by high values of overhead expenses. One of such back-office business processes is the current application development project, and outsourcing the project implies that the company is free from incurring extra overhead expenses associated with undertaking the project using in-house staff.
An important aspect associated with outsourcing the application development project is the flexibility of staffing. This is due to the fact that business processes to the company such as the application development project are seasonal, and its implementation is only done once, while not on a continual basis such as other business functions like record keeping. Therefore outsourcing the project implies that the company will only contact the providers in times where there are cyclic demands such as the application development. The in-house staff in charge of application development project is short-handed, and outsourcing such like business functions implies that there are supplementary resources for a specified duration of time at a steady cost (Engardio, 2006).
It is arguably evident that outsourcing the application development has significant benefits to the company such as a focus on the core business processes, flexibility in staffing, a reduction in the overhead expenses for the company and cost and efficiency enhancements to the organization. All these variables transform to the profitability of the company and enhances business continuity.
References
Bansal, K. (2004). A Text Book Of Information Technology. New York: APH Publishing.
Burkholder, N. (2006). Outsourcing: the definitive view, applications and implications. New
York: John Wiley and Sons.
Engardio, P. (2006). Outsourcing: Job Killer or Innovation Boost? Business Week , 10-15.
Verhoef, D., & Wijers, G. (2009). IT Outsourcing: Contracting the Partner. New York: Van
Haren Publishing.
