Question

List five reasons why organizations outsource. When should an organization choose not to outsource? Why are some organizations moving their software development work back in-house? Why are some organizations beginning to use onshoring?

Answer 1

Following is the reason of outsourcing:

1) To Reduce Operational cost

2) To meet the requirement of customer taste and preferences

3) To reduce the risk

4) To save the blockage of capital fund

5) To save the heavy investment in machinery and research & development of product

6) That company can focus on their core business

An organization should not to go for outsourcing when their product is differentiate from others because outsourced company may steal that differentiation and it will caused heavy loss. There is also some other reason like when company don't want to share their technical know how, their process of doing work etc.

Some of the organization are moving back to in house development because of

- costly outsourcing

- to keep secret their process

- make some differentiation

- for better and effective control

- they don't want to share their core competencies etc.

I hope this clear your doubt.

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