Global outsourcing of information systems and processing services

Abstract Outsourcing, selectively turning over some junctions of information systems and processing services to a subcontractor, has recently captured the imagination of both information systems and corporate executives. With increasing cost‐reduction pressures, management sees outsourcing as an important option, which allows them to better leverage resources, contain costs, and focus on strategic and value‐added activities. Several countries have large pools of information systems professionals and clerical staff who are well‐trained and whose salary expectations are significantly less than those of their U.S. counterparts. The pricing advantage held by these countries and the advances in information technology have made global outsourcing a small but rapidly growing sector of the overall outsourcing market. Adopting the viewpoint of a business from a developed country such as the United States, the article analyzes the opportunities and challenges of global outsourcing, develops managerial guidelines for successfully outsourcing information services, and identifies policy issues associated with the migration of white‐collar jobs in the service sector to overseas countries.