Over the last 10 years IT Application outsourcing with off shoring has been growing in size and volume, an indication that organizations have been benefiting from outsourcing. However, there are projects and deals that have been rolled back and organizations have been hurt due to vendor's inability to deliver quality product on time. This article addresses how organization can do an effective IT application outsourcing and not get trapped into standard headcount replacement by cheap labor pool. The article brings out perspective from the Authors; Vendor manager has worked for 12 years for outsourcing companies, managed large teams/project for outsourcing vendors and the customer who has championed outsourcing successfully in his organization. The article brings out the challenges that IT organizations face today in outsourcing effectively and successfully and how can they address these challenges.
