Chapter 10

Question 1

Backsourcing

Answer 1

Backsourcing: A business practice in which a company takes back in house assets, activities, and skills that are
part of its information systems operations and were previously outsourced to one or more outside IS providers.

Question 2

Business Ecosystem

Answer 2

Business ecosystem: A type of ecosystem that is an economic community where organizations and individuals
interact.

Question 3

Captive Center

Answer 3

Captive center: An overseas subsidiary that is set up to serve the parent company. Companies set up captive
centers as an alternative to offshoring.

Question 4

Cloud Computing

Answer 4

Cloud computing: The style of infrastructure for which capacity, applications, and services (such as development,
maintenance, or security) are provided dynamically by a third‐party provider over the Internet, often on a
“fee‐for‐use” basis. Customers go to the Web for the services they need.

Question 5

Community Cloud

Answer 5

Community cloud: Cloud infrastructure that is shared by several organizations and supports the common concerns of a specific community.

Question 6

Crowdsourcing

Answer 6

Crowdsourcing: The act of taking a task traditionally performed by an employee or a contractor and outsourcing
it through the form of an open call to an undefined, generally large group of people.

Question 7

Farshoring

Answer 7

Farshoring: A form of offshoring that involves sourcing service work to a foreign, low‐wage country that is
relatively far in distance or time zone (or both) from the client company.

Question 8

Full Outsourcing

Answer 8

Full outsourcing: The situation in which an enterprise outsources all its IS functions from desktop services to
software development.

Question 9

Hybrid Cloud

Answer 9

Hybrid cloud: A cloud infrastructure that is a combination of private and public clouds.

Question 10

Insourcing

Answer 10

Insourcing: The manner in which a firm provides IS services or develops IS from its own in house IS organization.

Question 11

IT Multisourcing

Answer 11

Multisourcing: A type of sourcing in which IT projects and services are allocated to multiple vendors who work
together to achieve the client’s business objectives

Question 12

Nearshoring

Answer 12

Nearshoring: A form of offshoring service work to a foreign, low‐wage country that is relatively close in distance
or time zone (or both) to the client company.

Question 13

Offshoring

Answer 13

Offshoring (outsourcing offshore): The situation in which an IS organization uses contractor services or even
builds its own data center in a distant land.

Question 14

Onshoring

Answer 14

Onshoring (inshoring): The situation in which outsourcing work is performed domestically.

Question 15

Outsourcing

Answer 15

Outsourcing: The business arrangement in which third‐party providers and vendors manage the activities of the
information systems. In a typical outsourced arrangement, the company finds vendors to perform operational,
support, and systems development activities, saving strategic decisions for the internal information systems
personnel.

Question 16

Private Clouds

Answer 16

Private cloud: A cloud infrastructure in which data are managed by the organization itself.

Question 17

Public Cloud

Answer 17

Public cloud: A cloud infrastructure in which data are stored outside of the corporate data centers in the cloud
provider’s environment.

Question 18

Selective Outsourcing

Answer 18

Selective outsourcing: The action taken when an enterprise chooses which IT capabilities to retain in house and
which to give to an outsider.

Question 19

Service Level Agreements (SLA)

Answer 19

Service‐level agreement (SLA): Portion of the formal service contract between clients and outsourcing providers
that describes the level of service including delivery time and expected service performance.

Question 20

1. Kellwood, the American apparel maker, decided to consolidate and bring IT operations back in-house in order to reduce costs. Kellwood choose which of the following strategies?
   a) Outsource
   b) Backsource
   c) Offshore
   d) Captive center
   e) Farshore

Answer 20

b) Backsource

Question 21

2. Outsourcing to a company located in the same time zone is referred to as this type of sourcing.
   a) Farshoring
   b) Nearshoring
   c) Zoneshoring
   d) Insourcing
   e) Cloud computing

Answer 21

b) Nearshoring

Question 22

3. If a company decides to make and develop IS, they are using this type of sourcing.
   a) Outsourcing
   b) Cloud computing
   c) Inshoring
   d) Offshoring
   e) Insourcing

Answer 22

e) Insourcing

Question 23

4. The purchase of a good or service that was previously provided internally, or that could be provided internally, is called:
   a) Outsourcing
   b) Insourcing
   c) Inshoring
   d) Offshoring
   e) Nearsourcing

Answer 23

a) Outsourcing

Question 24

5. The most common driver for insourcing is to:
   a) Keep employees loyal to the company.
   b) Make a system that cannot be bought.
   c) Develop internal skill sets.
   d) Maintain control over the development of the system
   e) Keep core competencies in-house.

Answer 24

e) Keep core competencies in-house.

Question 25

6. Which one of the following needs would suggest outsourcing as an option? a) Reduced capacity. b) Ease of transition to new technologies c) Increase supplier relations d) Growth of data centers e) All of the above.

Answer 25

b) Ease of transition to new technologies

Question 26

7. In 1989, Kodak chose a(n) _____ approach to outsourcing IS activities and chose to work with suppliers like IBM, DEC and Businessland. This approach was soon dominated by other firms. a) offshore b) multivendor c) nearshore d) centralized e) full outsourcing

Answer 26

b) multivendor

Question 27

8. The initial reason organizations outsourced IT was which one of the following? a) Downsizing b) Innovation c) Cost reduction d) Standardization e) Capacity

Answer 27

c) Cost reduction

Question 28

9. Organizations choose to outsource IT activities for all of the following reasons EXCEPT: a) To realize cost savings b) To have access to specialists they do not have in-house c) To create a core competency d) To infuse cash into the company e) To support capacity on demand

Answer 28

c) To create a core competency

Question 29

10. Outsourcing providers have more experience dealing with a large number of IS staff and as a result, are often good at doing all of the following EXCEPT: a) Marketing IS talent b) Providing relevant technical training c) Retaining IT workers for short-term employment d) Hiring good IT professionals e) Developing and sharing best practices

Answer 29

c) Retaining IT workers for short-term employment

Question 30

11. All of the following are risks associated with IS outsourcing EXCEPT: a) Loss of control b) Dependency on outsourcing providers c) Inadequate adaption of newer technologies d) Requiring more training of in-house staff e) Potential loss of competitive secrets

Answer 30

d) Requiring more training of in-house staff

Question 31

12. Of the following list, the newest sourcing option for today’s IT organizations is: a) Outsourcing b) Insourcing c) Farshoring d) Cloud computing e) Onshoring

Answer 31

d) Cloud computing

Question 32

13. Ensuring a cultural fit with an outsourcing provider is especially important when an organization is considering which one of the following? a) Offshoring b) Insourcing c) Onshoring d) Cloud computing e) Selective outsourcing

Answer 32

a) Offshoring

Question 33

14. Organizations may shy away from cloud computing because _________ a) it does not support multiple time zones. b) it costs more money than offshoring. c) of increased data security and privacy concerns. d) SLAs cannot be established. e) short term contracts are required.

Answer 33

c) of increased data security and privacy concerns.

Question 34

15. The functions of an entire data center can be replaced by which one of the following cloud computing providers? a) Software as a Service (SaaS) b) Application Service Provider (ASP) c) Platform as a Service (PaaS) d) Infrastructure as a Service (IaaS) e) Outsourcing as a Service (OaaS)

Answer 34

d) Infrastructure as a Service (IaaS)

Question 35

16. iCloud is an example of which one of the following? a) Offshoring b) Insourcing c) Farshoring d) Cloud computing e) Backsourcing

Answer 35

d) Cloud computing

Question 36

17. This is when an IS organization uses contractor services, or even builds its own data center, in a distant land. a) Cloud computing b) Insourcing c) Inshoring d) Offshoring e) Nearsourcing

Answer 36

d) Offshoring

Question 37

18. IT organizations will outsource which one of the following IT activities? a) Programming b) IT transactions c) Knowledge-based business processes d) Data storage e) All of the above.

Answer 37

e) All of the above.

Question 38

19. A small cluster of three countries (China, Malaysia and Korea) are creating a reputation for this type of outsourcing. a) Farshoring b) Nearshoring c) Cloud computing d) Captive center e) Full outsourcing

Answer 38

b) Nearshoring

Question 39

20. To provide potential customers an idea of an outsourcing provider’s development capabilities, the Software Engineering Institute developed this rating. a) Tier * b) IaaS c) ISO9001 d) CMM e) Six Sigma

Answer 39

d) CMM

Question 40

21. Which of the following makes countries attractive for offshoring? a) English language proficiency. b) Political stability. c) Economic stability. d) Countries with friendly relationships. e) All of the above.

Answer 40

e) All of the above.

Question 41

22. This is a type of captive center that performs core business processes for a parent company and outsources noncore work offshore. a) Hybrid Captive b) Shared Captive c) Divest Captive d) Terminated Captive e) Core Captive

Answer 41

a) Hybrid Captive

Question 42

23. What is it called when a company brings IS capabilities that were previously outsourced back in-house? a) Backsourcing b) Insourcing c) Software as a Service d) Nearshoring e) Cloud computing

Answer 42

a) Backsourcing

Question 43

24. Outsourcing decisions can be difficult and expensive to reverse because of: a) Cultural differences. b) The complicated infrastructure and staffing considerations. c) Data security. d) Data loss. e) CMM.

Answer 43

b) The complicated infrastructure and staffing considerations.

Question 44

25. The global outsourcing market is growing.

Answer 44

T

Question 45

26. Only large, multi-national organizations pursue outsourcing arrangements.

Answer 45

F

Question 46

27. Using outsourcing providers frees up a business’s employees so that they can devote their energies to core competencies for the business.

Answer 46

T

Question 47

28. Outsourcing an IT infrastructure will always save an organization money.

Answer 47

F

Question 48

29. The reasons given for backsourcing are similar to the reasons given for outsourcing in the first place.

Answer 48

T

Question 49

30. More highly developed countries tend to offer higher levels of skills at lower costs.

Answer 49

F

Question 50

31. Outsourcing of IT services began in 1949 with Eastman Kodak.

Answer 50

F

Question 51

32. From the perspective of outsourcing clients, one of the best things about outsourcing are the 10-year long-term agreements.

Answer 51

F

Question 52

33. This is the formal contract between clients and an outsourcing provider that describes the expected performance of the service.

Answer 52

Ans: Service Level Agreement (SLA)

Question 53

34. This was the first country to make IT outsourcing a total industry.

Answer 53

Ans: India

Question 54

35. To reduce its dependence on a single outsourcing provider, an organization will seek flexibility and take a “best-of-breed” approach. What is the term used to describe this use of multiple outsourcing vendors?

Answer 54

Ans: Selective outsourcing or strategic sourcing

Question 55

36. This is the most widely used form of cloud computing.

Answer 55

Ans: SaaS, Software as a Service or Application Service Provider

Question 56

37. To manage control yet realize the financial benefits that come with outsourcing, firms have created these subsidiaries to operate on their behalf and provide services.

Answer 56

Ans: Captive center

Question 57

38.This is the most traditional approach to sourcing.

Answer 57

Ans: Insourcing

Question 58

39. Cloud computing is a form of outsourcing in which IT services are provisioned over the __________.

Answer 58

Ans: Internet