Question

Turnkey Services is an application service provider that offers payroll and tax preparation services for hundreds of businesses in the Midwest. The firm is considering a major expansion into accounting and financial services and is looking into the possibility of supporting this move by hiring IT subcontractors in several foreign countries. Peter Belmont, Turnkey’s president, has asked you to help him reach a decision. Specifically, he wants you to cite the pros and cons of offshore outsourcing. He expects you to perform Internet research on this topic, and he wants you to present your views at a meeting of Turnkey managers next week.

Answer 1

In addition to numerous outsourcing options, a company can choose to develop its own systems,or purchase, possibly customize, and implement a software package. Although many factors influence this decision, the mostimportant consideration is the total cost of ownership (TCO). In addition to these options, companies also develop user applications designed aroundcommercial software packages, such as Microsoft Office, to improve user productivity andefficiency.Make or Buy DecisionThe choice between developing versus purchasing software often is called amake or buy,orbuild or buydecision. The company's IT department makes, builds, and developsin-housesoftware. Asoftware packageis obtained from a vendor or application service provider.