Outsourcing is a means adopted by companies to offset their expenses. IT Outsourcing is usually done from third world countries where human resources are less expensive. Outsourcing can also be employed as a means of lowering the time needed to complete a project by engaging people to perform multiple tasks. The service provider is concerned with the day to day management of the entire business operations. The IT Services provider enters into a contract and the costs are agreed upon. Information technology, human resources, facilities, real estate management, and accounting are the main business segments which are outsourced. In recent times telemarketing, cad drafting, customer service, market research, manufacturing, designing, and web development, content writing, ghostwriting and engineering segments are also being out sourced.

Another segment of the outsourcing business is off-shoring. Though outsourcing and off shoring are alike as cheese and chalk, still both the types are highly labor intensive and are done by third world countries where the labor is less expensive. In brief Off-shoring is the complete transfer of an organizational function to another state or country. Whether the work remains in the company or is outsourced is immaterial. With the integration of the global economy the line separating outsourcing and off-shoring are getting thinner and thinner. An evidence of this is the increasing number of Indian companies in the west. An example of this type of company is V-India which has gone into a very productive partnership with entrepreneurs in Israel to make a mark in the IT Outsourcing business.

Another form of outsourcing is known as multi-sourcing. Multi-sourcing means getting the job done from multiple sources. This form of outsourcing has its inherent benefits and pitfalls. The benefits include chance to compare the quality of work done by the service providers, faster completion of the project and reduced risk, if one service provider ceases to provide services ,the work is not affected. The disadvantage of this form of outsourcing is there is no uniformity in the work done. The quality of the work can vary with different service providers

Another form of outsourcing is Strategic outsourcing. This form of outsourcing is done by big business houses that depend upon intermediate markets to provide some unique services in addition to their existing capabilities. Strategic outsourcing helps to coordinate the production across a value chain. It simplifies and standardizes the information making it easier to transfer business activities across boundaries.

The decision to outsource a service requires the approval of the managing board. Since money is paid for getting the job done to the outsourcing company, it also means a transfer of some of the company's assets. So any such decision has to be justified and should be profitable. Once the board approves the decision to outsource any job a Letter of intent is issued to prospective service providers. The service providers are short listed and meetings are held to specify the client's needs. Once the prospective service provider is identified and agreement is entered. The contract is the core of any outsourcing operations. It is a legally binding document which clearly outlines the parameters in which the business relation with the client and the service provider will revolve. There are three important dates or deadlines in the contract-

1) Contract signature date-when the contract is signed.
2) The effective date when the contract terms become active.
3) Service commencement date when the supplier will take over the services.

A four month transition period is given from the service commencement date to allow for the recruitments of the staff and other requirements. There are various punitive clauses for breach of trust or abandoning projects. Heavy penalties are imposed if any such violation occurs. More and more companies and business houses are insisting on this clause, especially to IT Outsourcing companies in India considering the dismal record of these companies in maintaining the confidentiality of information. After the completion of the contract for the stipulated period, the client and the service provider may terminate the agreement and take steps to revert the control of the services outsourced back to the client.

IT Outsourcing is a dynamic business and it is always in a flux. New and more lucrative avenues are being opened. One of the disadvantages with the outsourcing business is its complete unpredictability. With the American economy facing it worst recession of the century the space in the outsourcing market is going to become more and more congested. Novices are going to be ruthlessly eliminated and only the best and those who have become more adapted to the cutthroat competition can survive. As said by the proponent of the theory of evolution Charles Darwin "the survival of the fittest" aptly fits to the outsourcing market also.