Outsourcing involves contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming or other DSS development activities. The outsourcer should be evaluated as a long-term asset and as a source of ongoing value to the company. Time and resources need to be dedicated to managing the relationship and maximizing its value. The customer needs a project manager to manage the outsourcing relationship. The intent should be to keep the relationship for as long as it brings value to the customer. Over time new technology alliances may need to be formed as technology and organizations change. Therefore, a customer should strive for long-term relationships and should try to align the outsourcer's motivation with its goals by developing appropriate incentives and penalties.
Outsourcing DSS projects has a number of risks. First, a company relinquishes control of an important capability to an outside organization. Second, contracts for DSS services may be long term and may lock a company into a particular service provider. Finally, a reliance on external sources for new systems development can lead to low technical knowledge among the in-house MIS staff.
Some of the benefits of outsourcing include potentially lower cost development; access to expertise about new technologies; and outsourcing can free up resources within the firm for other projects. The risks often lead to in-house DSS development rather than to outsourcing. When does outsourcing seem to work? Outsourcing can be successful when we need to turnaround DSS activities quickly and our MIS staff seems unable to build innovative DSS in-house. In some companies this situation exists for Web-Based DSS.