It is predicted that by the Year 2000 the worldwide IT outsourcing market will grow to over $100 billion. The range of IT activities being outsourced is expanding fast. It’s clear that IT outsourcing is not simply a fashionable, passing trend of the ’90s. It is an increasingly viable option being taken by more and more public and private organizations.

A significant change in management philosophy is taking place in the 1990s. Organizations have switched emphasis to concentrate on their core activities in order to increase market penetration and become more competitive. It is now widely recognized that to compete effectively, it is essential for business to concentrate on what they do best and where they can add value.

To begin with, outsourcing requires an understanding of the concept of core competencies. Core competencies are the capabilities of an organization that truly distinguish it from its competitors. They are unique capabilities upon which the success of the company, both today and in the future depends. Core competencies are what gives an organization its clear leadership position as seen by its customers.

All remaining activities are non-core, and executives are now asking if their company is best-in-world at performing these activities. If not, they explore how outsourcing these activities might enable the company to deliver greater value to its customers at lower costs.

The future is not what it used to be... & Outsourcing is , increasingly being used as a tool for gaining a competitive edge. Understanding of where, when and how to successfully outsource, is proving to be one of the most difficult and important business skills needed for your company’s future.

Outsourcing today covers a range from HR, real estate management, inventory control and most commonly, the information systems (MIS) and related communications network management.

Outsourcing used to be a tactic to improve operations and financial performance of troubled organizations. Today’s outsourcing has evolved to be a preferred method of doing business by companies for numerous positive reasons. As outsourcing fulfills a need that transcends virtually all businesses, outsourcing has also caught the eye of the investment community. Any business that helps other businesses perform better are well positioned to prosper far beyond the millennium change.

An outsourcing vendor cannot be selected based upon the lowest price. Both short term and long tern goals must be realized to prevent outsourcing from becoming our worst nightmare. For vendor selection, serious consideration must be given to: