Turnkey Services is an application service provider that offers payroll and tax

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.

Explanation / Answer

As above say that Turnkey Services is an application service provider that offers payroll and tax preparation services for hundreds of businesses in the Midwest and provide service to offshore. Offshore outsourcing refers to the practice of shifting IT development, support, and operations to other countries. Many firms are sending IT work overseas at an increasing rate. Like any other management strategy, offshore outsourcing involves pros and cons.

Pros of offshore outsourcing

- The main reason for offshore outsourcing is lower bottom-line costs.

- Offshore outsourcing, however, involves some concerns. For example, workers, customers, and shareholders in some domestic companies have protested this trend, and have raised public awareness of possible job loss and economic impact.

Cons of Offshore outsourcing

- Offshore outsourcing involves serious issues regarding project control, security, disparate cultures, and effective communication with critical functions that might be located half-way around the globe.

To address these issues, managers must take specific steps, such as the ones suggested by Information Disciplines, Inc.

. Before a firm chooses an offshore strategy, it should analyze carefully the benefits and potential risks
horizontal applications usually are more widely available and less expensive than vertical applications.

Some vendors offer hybrid application software, which combines a vertical application tailored to a specific industry with a horizontal application, such as a spreadsheet compare reasons for in-house software development to reasons for purchasing a software package. Industry experts suggest that one guideline for evaluating an organization’s need for custom versus commercial software is to look for a commercial application package that has an 80 percent or better fit with requirements.

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