Socio-Economic Impacts of Offshore Outsourcing of Information Technology

Author:

Knapp Karl1,Sharma Sushil K.2,King Kevin3

Affiliation:

1. University of Indianapolis, USA

2. Ball State University, USA

3. Clarian Health, Indianapolis, USA

Abstract

Offshore information technology (IT) outsourcing has been becoming mainstream alternative to inhouse operations. While offshore development is a relatively new trend in IT, the concept of outsourcing manufacturing and service operations has been going on for more than 50 years. Many Asian countries are driving their economic success through taking offshore projects from developed countries. These countries have advantages of low-cost and available labor force. Various studies conducted over the last 10 years have shown that outsourcing allows firms to reduce high overhead costs, improve productivity, contribute flexibility, and thus improve overall performance of the firm. However, offshore IT outsourcing brings new challenges and risks. The skeptics believe that outsourcing may weaken the local business competitiveness of the region, investors’ confidence in investing in local businesses, and may create a spiral effect on economic indicators such as: unemployment, enrollment in schools, living styles, housing, and construction, and so forth`. This study investigates the socio-economic impacts of offshore IT outsourcing in the United States using a system dynamics model.

Publisher

IGI Global

Reference76 articles.

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