Many companies are looking to outsource development and maintenance of their application software. Common reasons that companies outsource application software are to reduce their costs, improve quality, obtain flexible staffing levels, and obtain improved service and support so they can focus on their core competence such as, designing clothes, managing equity portfolios, or running hospitals. Choosing whether to outsource or not is a strategic decision for a company. Once a company has decided to outsource, however, it must still choose an outsourcing approach that best fits it needs. This paper will describe the many different options for application software outsourcing, including the advantages and disadvantages of each alternative.
Many Flavors of Application Software Outsourcing Defining the Problem In the 1990s many companies rushed to upgrade or replace their legacy software prior to January 1, 2000—affectionately known forevermore as Y2K. There was fear and concern that many legacy software applications would be unable to handle the requirements of a change in the first two digits of a four-digit year in date fields. A large number of companies chose to purchase and implement new software packages that handled most of