Question

Why do firms outsource their IT functions? Explain the options of traditional IT outsourcing and cloud computing, and how they differ.  

Answer 1

Corporate management has long complained about the administrative burden and high cost associated with managing and maintaining IT functions. In an effort to bring costs under control and to escape their IT headaches, many corporate executives look to IT outsourcing. Under this practice the organization sells its IT resources (hardware, software, and facilities) to a third-party outsourcing vendor such as HP Enterprise Services (formally EDS). The outsourcing organization then leases back IT services from the vendor for a contract period of typically between five and ten years. A variant of IT outsourcing, called cloud computing, is location-independent computing whereby shared data centers deliver hosted IT services over the Internet. These services fall into three categories: software as a service (SaaS), infrastructure as a service (IaaS), and platform as a service (PaaS).

These services fall into three categories: software as a service (SaaS), infrastructure as a service (IaaS), and platform as a service (PaaS).