ABSTRACT
Outsourcing is made up of two words-“out” and “sourcing.” Sourcing refers to the act of transferring work, responsibilities, and decision rights to someone else. Organizations source out work when there are others who can do it cheaper, faster, and better. They source work that can be conducted by others at lower cost and with greater effectiveness or they will waste valuable resources in the pursuit of
6.1 Introduction .................................................................................................... 41 6.2 Model Formulation ......................................................................................... 43 6.3 Valuing Real Option for Outsourcing with Implementation Time Lag .......... 45
6.3.1 Binomial Lattice Approach ................................................................46 6.4 Summary ........................................................................................................ 51 References ................................................................................................................ 51
capabilities that can be readily purchased from others. This pursuit results in poor management since, by its very nature, management is the work of achieving objectives in an effective manner utilizing the least resources. Moreover, engaging in outsourcing allows an organization access to expertise, knowledge, and capabilities found outside its bounds (Power et al. 2006).
