Outsourcing and on-Demand Computing

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Outsourcing and On-Demand Computing

by Beryl Morgan
November 4, 2007
Outsourcing and on-demand computing are two of the fastest emerging business tactics in the industry today. In outsourcing, businesses contract out certain services to an outside provider or manufacturer, often overseas. On-demand computing is similar to outsourcing only here businesses contract out their computing resources, such as computation and storage, rather than an actual business services. The computing is tracked as a metered service, similar to physical public utility such as electricity, water, natural gas, or telephone network. In either case, some piece of the company is broken off and run by an outside source. “Organizations can outsource any aspect of their information system, including hardware maintenance and management, software development, database systems, networks and telecommunications, Internet and intranet operations, hiring and staffing, and the development of procedures and rules regarding the information system” (Stair, 348). For the most part, outsourcing and on-demand computing have had a positive financial impact on US businesses. They are able to “reduce costs, obtain state-of-the art technology, eliminate staffing and personnel problems, and increase technological flexibility” (Stair, 348). However, from a consumer standpoint, there has been much controversy over these tactics. For example, many believe that by outsourcing services to foreign companies for cheaper rates, businesses are damaging the local labor markets. Often times there are language barriers making communication difficult between consumers and foreign workers conducting companies’ services. Staff “turnover is higher under an outsourcer and key company skills may be lost with retention outside of the control of the company” (http://en.wikipedia.org/wiki/Outsourcing). Qualifications of outsourced staff are often well under those of actual business employees...
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