Cloudsourcing vs Outsourcing

Cloud - the third generation of outsourcing

Srinivasan Sundara Rajan

Second Generation Outsourcing
Outsourcing is more and more viewed by the enterprises as a transformational  activity, where by
  • Enterprises Utilizes Out Sourcing to enhance or refine the business capability
  • The Vendor/Supplier of out sourcing is viewed as a partner in transformation
  • It is more about inter dependence than dependence with a single vendor
Second-generation outsourcing is designed to facilitate customer intimacy and product leadership for an organization. This occurs through a transformation of IT architectures; alignment of IT with the business; and the optimization of business processes to take advantage of the new capabilities provided. These in turn lead to increased shareholder value. Second-generation outsourcing shifts the relationship between outsourcer and outsourcee from trusted supplier to vital business partner.
Cloud SourcingCloudsourcing refers to sourcing complete solutions to run your business from the public cloud. The solution provider that offers Cloudsourcing products or services is called "Cloudsourcer". The Cloudsourcer typically provides solutions that knits together cloud applications, cloud platforms and cloud  infrastructure.
Cloud Sourcing Bettering Out Sourcing
The below table gives  a list of areas where the cloud sourcing significantly  out weights benefits of second generation out sourcing, which the enterprises can consider for their future business goals.
Category Second Generation
Out Sourcing
Cloud Sourcing Comments
Upgrades , Patches and maintenance of existing software stack POOR GOOD In traditional out sourcing, data centers exist inside premise and take significant time in upgrading larger work like database upgrades or operating system upgrades. These even disrupt the business capability needs
Quick Procurement of Services FAIR GOOD The multi vendor model of the second generation out sourcing also brought in challenges for consistent discovery, request and provisioning of  services, however the basic  Cloud tenant enables a catalogue of services.
Retention of Key Subject Matter Expertise FAIR GOOD Most out sourcing models  retain the key IT staff with the Subject Matter expertise, however  as the work is shifted  to the vendor data centers  this  retention of key employees has been affected, Cloud sourcing ensures that the key staff is available for the interface with cloud provider.
Vendor Lock In Avoidance FAIR GOOD Most of the projects are built using the Vendor proprietary features  and hence the out sourcing model had to continue with vendor lock in, SaaS  cloud sourcing  makes the vendor product mapping  irrelevant and gives flexibility to the enterprise
Legal and Data Proximity Compliance GOOD POOR In out sourcing model  the organization has complete control of data and cloud sourcing at this time is dependent on cloud provider's data centers.
Legacy Modernization, Consolidation of Redundant applications POOR FAIR In the out sourcing model,  merging existing systems or de-commission redundant systems is possible but it is mostly a manual and time consuming process, resulting in them getting postponed many a times. However Cloud Sourcing  makes the physical blue print of the application  transparent and hence redundant applications automatically  cost less  to the organization as their usage is likely to be less.
Federal, state and international legal compliance FAIR GOOD In the out sourcing model, compliance projects are generally a urgent patch work to get it done before the dead line expires,  In the SaaS model the product Vendors ensures compliance.
Thought Leadership in the Domain FAIR GOOD Out sourcing model while supports the thought leadership from the Supplier, but it is limited to current business process flow of the out sourcing enterprise.  However in Cloud Sourcing the multi tenant design ensures that best of thought leadership  from various players in the particular domain  is provided through a SaaS platform.
Minor Enhancements, ability to do quick fixes of the applications GOOD POOR In the out sourcing model the contracts can be done in such a way to do a fixed capacity of work for minor enhancements, SaaS software is generally static over a period of time and  depends on upgrades from the cloud provider

As per the over all analysis, Cloud Sourcing  provides more benefits that traditional second generation that is in place and is worth considering for the enterprises.