Outsourcing or insourcing strategy : comparision Johnny C.h. Lok

Environmental uncertainty refers to unanticipated changes in circumstances surrounding an exchange in market uncertain and technological uncertainty. Market uncertainty is the fluctuation and unpredictability of demand. With respect to innovation projects, market uncertainty may cause frequent changes to the development, complications and adding expense to external contracting. These changes may necessitate renegotiation or cancellation of innovation contracts, which will likely carry prohibitive penalties ( a term) transaction costs. These transaction costs promote internalization under high levels of market uncertainty. Otherwise, technological uncertainty environments, selecting market governance allows firms the flexibility to end relationship should technical requirements shift. It seems that market and technological external change factor will influence to benefits to any organizations to choose outsourcing strategy. On the other side, outsourcing can bring this question: Whether the offshore outsourcing of information technology jobs choice is suitable to any IT organizations? Nowadays. The offshore outsourcing if IT jobs from the United States has been enabled by a powerful influence of global economic demographic and technological forces. In fact, many IT companies were drawn to offshoring outsourcing because of the need for programmers to fix the Y2K problem in the late 1990- year. It is shortages of US programmers. Other factors driving this phenomenon include the wage gap between the US and developing countries, e.g. China and India, advances in technology, labor availability, expanding foreign markets and foreign government incentives. The spread of the offshoring phenomenon from low skill manufacturing to high wage white collar service industry jobs reduces the country’s IT jobs critics, it represents the mobility for many US workers who saw post-secondary education as the route to a higher standard of living. The offshoring outsourcing of manufacturing and service jobs from the US to lower cost foreign nations become a national issue in a very short time. The impact of offshore outsource on the information technology sector gives outsourcing potential loss of millions of jobs at all wage levels and the critical contribution is the IT sector to US productivity growth. However, decisions about the locations of manufacturing or service facilities reflect market forces key factors include the size of local markets, capital availability and costs, labor availability skill levels and cost, logistic issues, reliability and infrastructure and IT in particular relationships with research institutions. All these factors will influence the choice of offshore outsource IT jobs strategy top any organizations.