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Abstract

This article examines the impact of Global IT Outsourcing on Information Technology (IT) firms from the off-shore sourcing perspective. IT Providers are defined in this article as companies that produce IT as opposed to companies that consume IT. To assess the impact of outsourcing on such companies, this article presents an Enterprise Architecture (EA) view of IT and uses it as the framework to determine the impact of outsourcing. The three dimensions of Enterprise Architecture include people, process and product and/or services. The article argues that if the sourcing decisions are based purely on short term goals such as cost, then the long term viability of the IT firm may be compromised. Lack of an IT development model and lack of IT metrics makes it difficult for IT Providers to truly plan and manage the off-shore resources. This article suggests that shorter development cycles, requirements volatility, and the need for constant developer-user interaction makes off-shore outsourcing more difficult. To address these challenges, organizations should develop metrics and governance practices based on experience. This article also proposes that the type of product or service is critical in addressing the decision to outsource. The higher the intellectual (or proprietary) content, the higher is the risk when outsourcing. This article presents two simple frameworks, one for assessing the benefits and risk of outsourcing for IT infrastructure services and the other for IT applications. IT Providers are advised to pay particular attention to the life cycle model of off-shoring where early gains give way to a learning and adjustment phase. If the IT firm successfully develops a rich experience base and adjusts the off shore model, then sustained benefits can be realized.

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