Generative AI and IT Outsourcing

Abstract

Outsourcing is a process by which an organisation engages a third party with appropriate expertise to run some of its services on its behalf. It has been subject to various waves of change over the years. I have seen it suggested that the origins and history of outsourcing took shape during the Industrial Revolution when the way factories operated and sourced raw materials was transformed as they were no longer limited to a geographical location. For example, US manufacturers would import raw materials which were processed in Scotland thus maintaining quality while reducing cost – a classic outsourcing benefit. This has been a theme for outsourcing as customers seek to benefit from and leverage the expertise of suppliers particularly with skill sets like computer and business services. Outsourcing as we know it today properly commenced in the 1980’s, initially with reference to non-core services such as accounting, data processing and human resources. Wikipedia describes outsourcing quite succinctly: “The term outsourcing, which came from the phrase outside resourcing, originated no later than 1981. The concept, which The Economist says has "made its presence felt since the time of the Second World War", often involves the contracting out of a business process (e.g., payroll processing, claims processing), operational, and/or non-core functions, such as manufacturing, facility management, call center support.”