Amoco Canada Petroleum Company Ltd. is a $4 billion corporation engaged in oil and gas exploration and production. In October 1992 the company signed a five-year "transitional outsourcing" contract valued at $70 million to $90 million with a leading outsourcing vendor. Amoco Canada like many other organizations, has chosen to outsource information technology services as a way to meet the challenge of reducing costs while implementing technological changes and maintaining services at acceptable levels. Outsourcing is a growing trend as evidenced by a study done several years ago by the Yankee Group, a Boston Massachusetts based information technology consulting firm. They predicted that every Fortune 500 company would consider information systems outsourcing and 20% would outsource at least some portion of their information technology functions by 1994. Recent studies by The Gartner Group suggest that this indeed is happening.

What is outsourcing? In its most basic form it is the purchase of goods or services previously provided internally and is not exclusive to information technology. Information systems outsourcing is not a new phenomenon and in fact has been around since the dawn of data processing. In addition to data processing services it has included, use of contract programmers, time sharing and purchase of packaged software.

A renewed interest in information technology outsourcing stems from its changing nature. Companies are not just approaching outsourcing as a way to reduce costs, as has been the case in the past, but as a strategic tool in the management of information technology. The data centre is now just one of many functions being outsourced. More companies are including the management of local and wide area networks, desktop computer systems, applications development, and midrange computer systems in their outsourcing.

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