208 10 chapter Information Systems Sourcing After 13 years, Kellwood, an American apparel maker, ended its soups!to!nuts IS outsourcing arrangement with EDS . The primary focus of the original outsourcing contract was to integrate 12 individually acquired units with different systems into one system. Kellwood had been satis- " ed enough with EDS ’ s performance to renegotiate the contract in 2002 and 2008, even though at each renegotiation point, Kellwood had considered bringing the IS operations back in house, or backsourcing. The 2008 contract iteration resulted in a more # exible $105 million contract that EDS estimated would save Kellwood $2 million in the " rst year and $9 million over the remaining contract years. But the situation at Kellwood had changed drastically. In 2008, Kellwood had been purchased by Sun Capital Partners and taken private. The chief operating of" cer (COO), who was facing a mountain of debt and possibly bankruptcy, wanted to consolidate and bring the operations back in house to give some order to the current situation and reduce costs. Kellwood was suffering from a lack of IS standardization as a result of its many acquisitions. The chief information of" cer (CIO) recognized the importance of IS standardization and costs, but she was concerned that the transition from outsourcing to insourcing would cause serious disruption to IS service levels and project deadlines if it went poorly. Kellwood hired a third!party consultant to help it explore the issues and decided that backsourcing would save money and respond to changes caused by both the market and internal forces. Kellwood decided to backsource and started the process in late 2009. It carefully planned for the transition, and the implementation went smoothly. By performing stream- lined operations in house, it was able to report an impressive $3.6 million savings, or about 17% of annual IS expenses after the " rst year. 1 The Kellwood case demonstrates a series of decisions made in relation to sourcing. Both the decision to outsource IS operations and then to bring them back in house were based on a series of This chapter is organized around decisions in the Sourcing Decision Cycle. The ! rst question regarding information systems (IS) in the cycle relates to the decision to make (insource) or buy (outsource) them. This chapter ’ s focus is on issues related to outsourcing whereas issues related to insourcing are discussed in other chapters of this book. Discussed are the critical decisions in the Sourcing Decision Cycle: how and where (cloud computing, onshoring, offshoring). When the choice is offshoring, the next decision is where abroad (farshoring, nearshoring, or captive centers). Explored next in this chapter is the ! nal decision in the cycle, keep as is or change in which case the current arrangements are assessed and modi- ! cations are made to the outsourcing arrangem.

1. 208
10
chapter Information Systems
Sourcing
After 13 years, Kellwood, an American apparel maker, ended
its soups!to!nuts IS outsourcing
arrangement with EDS . The primary focus of the original
outsourcing contract was to integrate
12 individually acquired units with different systems into one
system. Kellwood had been satis-
" ed enough with EDS ’ s performance to renegotiate the
contract in 2002 and 2008, even though
at each renegotiation point, Kellwood had considered bringing
the IS operations back in house,
or backsourcing. The 2008 contract iteration resulted in a more
# exible $105 million contract that
EDS estimated would save Kellwood $2 million in the " rst
year and $9 million over the remaining
contract years. But the situation at Kellwood had changed
drastically. In 2008, Kellwood had been
purchased by Sun Capital Partners and taken private. The chief
operating of" cer (COO), who was
facing a mountain of debt and possibly bankruptcy, wanted to
consolidate and bring the operations
back in house to give some order to the current situation and
reduce costs. Kellwood was suffering
from a lack of IS standardization as a result of its many
acquisitions. The chief information of" cer
(CIO) recognized the importance of IS standardization and

2. costs, but she was concerned that the
transition from outsourcing to insourcing would cause serious
disruption to IS service levels and
project deadlines if it went poorly. Kellwood hired a
third!party consultant to help it explore the
issues and decided that backsourcing would save money and
respond to changes caused by both the
market and internal forces. Kellwood decided to backsource
and started the process in late 2009. It
carefully planned for the transition, and the implementation
went smoothly. By performing stream-
lined operations in house, it was able to report an impressive
$3.6 million savings, or about 17% of
annual IS expenses after the " rst year. 1
The Kellwood case demonstrates a series of decisions made in
relation to sourcing. Both the
decision to outsource IS operations and then to bring them back
in house were based on a series of
This chapter is organized around decisions in the Sourcing
Decision Cycle. The ! rst question
regarding information systems (IS) in the cycle relates to the
decision to make (insource) or
buy (outsource) them. This chapter ’ s focus is on issues
related to outsourcing whereas issues
related to insourcing are discussed in other chapters of this
book. Discussed are the critical
decisions in the Sourcing Decision Cycle: how and where
(cloud computing, onshoring,
offshoring). When the choice is offshoring, the next decision is
where abroad (farshoring,
nearshoring, or captive centers). Explored next in this chapter is
the ! nal decision in the
cycle, keep as is or change in which case the current
arrangements are assessed and modi-

3. ! cations are made to the outsourcing arrangement, a new
outsourcing provider is selected,
or the operations and services are backsourced, or brought back
in house. Risks and strat-
egies to mitigate risks are discussed at each stage of the cycle.
1 For more information see Stephanie Overby, “Company
Saves Millions by Ending Outsourcing Deal,” CIO.com,
http://www.cio.
com/article/549463/Company_Saves_Millions_By_Ending_IT_
Outsourcing_Deal?page=1&taxonomyId=3195 (accessed
January
31, 2012); B. Bacheldor, “Kellwood Stayed on Top of Its
Outsourcing All the Way to the End,” CIO.com,
http://blogs.cio.com/
beth_bacheldor/kellwood_stayed_
on_top_of_its_outsourcing_all_the_way_to_the_end?page=0
(accessed February 10, 2012).
c10.indd 208 11/26/2015 6:32:09 PM
http://www.cio.com/article/549463/Company_Saves_Millions_B
y_Ending_IT_Outsourcing_Deal?page=1&taxonomyId=3195
http://blogs.cio.combeth_bacheldor/kellwood_stayed_%20on_to
p_of_its_outsourcing_all_the_way_to_the_end?page=0
209Sourcing Decision Cycle Framework
factors. These factors, similar to those used by many companies
in their sourcing decisions, are discussed later in
this chapter. The global outsourcing market has been growing
steadily. Companies of all sizes pursue outsourcing
arrangements, and many multimillion!dollar deals have been
widely publicized. As more companies adopt out-
sourcing as a means of controlling IS costs and acquiring

4. “best!of!breed” capabilities, managing these supplier
relationships has become increasingly important. IS departments
must maximize the bene"t of these relationships
to the enterprise and pre!empt problems that might occur.
Failure in this regard could result in deteriorating quality
of service, loss of competitive advantage, costly contract
disputes, low morale, and loss of key personnel.
How IS services are provided to a "rm has become an important
strategic and tactical discussion. As brie#y
mentioned in Chapter$6, there are numerous alternatives to
sourcing computing power, applications, and infrastruc-
ture. This chapter examines the sourcing cycle to consider the
full range of decisions related to who should perform
the IS work of an organization. The cycle begins with a decision
to make or buy information services and products.
Once the decision to make or buy has been "nalized, a series of
questions must be answered about where and how
these services should be delivered or products developed. The
discussion in this chapter is built around the Sourcing
Decision Cycle framework discussed in the next section.
Considering the answers to sourcing questions can help
explain a number of terms associated with sourcing: insourcing,
outsourcing, cloud computing, full outsourcing,
selective outsourcing, multisourcing, onshoring, offshoring,
nearshoring, farshoring, and backsourcing. For each
type of sourcing decision, the risks, or likelihood of something
negative occurring as a result of the decision, are
discussed, and some steps that can be taken to manage the risks
are proposed.
Sourcing Decision Cycle Framework
Sourcing does not really just involve only one decision. It
involves many decisions. The rest of this chapter is built
around the critical sourcing decisions shown in Figure$10.1.
Many of the chapter headings are tied to key decisions

5. in Figure$ 10.1. Although the Sourcing Decision Cycle starts
anywhere, we choose to start with the original
make!or!buy decision. If an organization decides to “make,”
that means that it plans to create and run its own
applications. “Buy,” on the other hand, means the organization
plans to obtain its applications from an outside
HYBRID CAPTIVE
CENTER
OFFSHORING
OUTSOURCING
ONSHORING
CLOUD
INSOURCING
Where abroad?
Make
Note: Insourcing can
include captive centers
Buy
Keep as is or
Change?
Where?
FARSHORING

6. NEARSHORING
How to
source?
Where?
FIGURE 10.1 Sourcing Decision Cycle framework.
c10.indd 209 11/26/2015 6:32:09 PM
210 Information Systems Sourcing
vendor or vendors. When the “buy” option is selected, the
organization becomes a client company that must then
decide on “how” and “where” to outsource. The answers to the
“how” question include the scope of the outsourcing
and the steps that should be taken to ensure its success. The
answers to the “where” question focus on whether the
client company should work with an outsourcing provider (i.e.,
vendor) in its own country, offshore, or in a cloud.
If the client company decides to go offshore because labor is
cheaper or needed skills are more readily available, it
must make another decision: It must decide whether it wants the
work done in a country that is relatively nearby or
in a country that is quite distant. Finally, the client company
chooses an outsourcing provider (or decides to do its
own IS work). After a while, the client company faces another
decision. It periodically must evaluate the sourcing
arrangement and see whether a change is in order. If the in
house work is unsatisfactory or other opportunities that
are preferable to the current arrangement have become
available, then the client company may turn to outsourcing.
If, on the other hand, the outsourcing arrangement is

7. unsatisfactory, the client company has several options to con-
sider: to correct any existing problems and continue outsourcing
with its current provider, to outsource with another
provider, or to backsource. If the company decides to make a
change in its sourcing arrangements at this point, the
Sourcing Decision Cycle starts over again.
Starting the Cycle: The Make!or!Buy Sourcing Decision
Managers decide whether to make or buy information services
and products. The products can include an appli-
cation or a system, and services can range from help desk
support, telecommunications, running data centers, and
even implementing and operating business processes as in
business process outsourcing (BPO). A simple “make”
decision often involves insourcing some or all of the business’s
IS infrastructure, and a simple “buy” decision often
involves outsourcing, although it could also include purchasing
packaged software. In its simplest form, the make!
or!buy decision hinges on whether to insource (“make”) or
outsource (“buy”).
Insourcing
The most traditional approach to sourcing is insourcing, or
providing IS services or developing them in the com-
pany’s own in house IS organization and/or in its local cloud.
Several “yes” answers to the questions posed in
Figure$10.2 favor the decision to insource. Probably the most
common reason is to keep core competencies in house.
Managers are concerned that if they outsource a core
competency, they risk losing control over it or losing contact
with suppliers who can help them remain innovative in relation
to that competency. Failing to control the competency
or stay innovative is a sure way to forfeit a company’s
competitive advantage. On the other hand, by outsourcing
commodity work, a "rm can concentrate on its core
competencies. Other factors that weigh in favor of insourcing

8. are having an IS service or product that requires considerable
security, con"dentiality, or adequate resources in house
(e.g., time to complete the project with current staf"ng or IS
professionals with the needed skills and training).
In some companies, the IS function is underappreciated by top
management. As long as everything is running
smoothly, top managers may not notice the work done by or
appreciate the services and products of the IS orga-
nization. Often an IS department that insources has found it
necessary to compete for resources differently than
if it outsources. It is necessary for the department to have
enough respect and support from top management to
acquire resources and get the department’s job done. A major
risk of insourcing is that the complexities of running
IS in house requires management attention and resources that
might better serve the company if focused on other
value!added activities.
Captive centers are a new variation of insourcing. A captive
center is an overseas subsidiary that is created to
serve its main “client,” the parent company, but it may serve
other clients as well. Firms have set up such subsid-
iaries to operate like an outsourcing provider, but the "rms
actually own the subsidiaries. They are launched in
less expensive locations, usually away from the company’s
headquarters or major operating units. The three most
common types of captive centers are basic, shared, and hybrid.2
The basic captive center provides services only
to the parent "rm. The shared captive center performs work for
both a parent company and external customers.
2 I. Oshri, J. Kotalarsky and C.!M. Liew, “What to Do with
Your Captive Center: Four Strategic Options,” The Wall Street
Journal (May 12, 2008), http://
www.wsj.com/articles/SB121018777870174513 (accessed

9. September 2, 2015).
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http://www.wsj.com/articles/SB121018777870174513
http://www.wsj.com/articles/SB121018777870174513
211Sourcing Decision Cycle Framework
The$hybrid captive center typically performs the more
expensive, higher pro"le or mission!critical work for the par-
ent company and outsources the more commoditized work that
is more cheaply provided by an offshore provider.
Outsourcing
Outsourcing means purchasing a good or service that was
previously provided internally or that could be provided
internally but is now provided by outside vendors. In the early
days of outsourcing, outside providers often took
over entire IS departments, including people, equipment, and
management responsibility. Reducing costs was the
primary motivation for outsourcing. This classic approach
prevailed through most of the 1970s and 1980s but then
experienced a decline in popularity. In 1989, Eastman Kodak
Company’s multivendor approach to meeting its
IS needs created the “Kodak effect.” Kodak outsourced its data
center operations to IBM, its network to Digital
Equipment Company, and its desktop supply and support
operations to Businessland.3 Kodak managed these rela-
tionships through strategic alliances.4 It retained a skeleton IS
staff to act for its business personnel with out-
sourcing providers. Its approach to supplier management
became a model emulated by Continental Bank, General
Dynamics, Continental Airlines, National Car Rental, and many
more.5

10. Kodak’s watershed outsourcing arrangement ushered in new
outsourcing practices that put all IS activities up
for grabs, including those providing competitive advantage. As
relationships with outsourcing providers become
FIGURE 10.2 Make or buy? Questions and risks.
Make or Buy Questions Suggests
Insourcing
Suggests
Outsourcing
Examples of Associated Risk in
Worse"Case Scenarios
Does it involve a core competency? Yes No If outsourced: Loss
of control over
strategic initiatives; loss of strategic focus
Does it involve con!dential or sensitive
IS services or software development?
Yes No If outsourced: Competitive secrets may
be leaked
Is there enough time available to
complete software development
projects in house?
Yes No If insourced: Project not completed on
time
Do the in"house IS professionals have
adequate training, experience, or skills

11. to provide the service or develop the
software?
Yes No If outsourced: Technological innovations
limited to what provider offers;
overreliance on provider’s skills
Are there reliable outsourcing
providers who are likely to stay
in business for the duration of the
contract?
No Yes If outsourced: Project not completed or,
if completed, is over budget and late
when another provider takes it over
Is there an outsourcing provider that
has a culture and practices that are
compatible with the client?
No Yes If outsourced: Con#ict between client
and provider personnel
Does the provider have economies of
scale that make it cheaper to provide
the service or develop the software
than in house?
Most likely No Most likely Yes If outsourced: Excessive costs
of project
or operations because of the way the
contract is written
Does it offer a better ability to handle
peaks?

12. Most likely No Most likely Yes If insourced: Loss of business
Does it involve consolidating data
centers?
Most likely No Most likely Yes If insourced: Inef!cient
operations
3 L. Applegate and R. Montealegre, “Eastman Kodak Co.:
Managing Information Systems Through Strategic Alliances,”
Harvard Business School case
192030 (September 1995).
4 Anthony DiRomualdo and Vijay Gurbaxani, “Strategic Intent
for IT Outsourcing,” Sloan Management Review (June 22,
1998).
5 Mary C. Lacity, Leslie P. Willcocks, and David F. Feeny,
“The Value of Selective IT Sourcing,” Sloan Management
Review (March 22, 1996).
c10.indd 211 11/26/2015 6:32:10 PM
212 Information Systems Sourcing
more sophisticated, companies realize that even such essential
functions as customer service are sometimes better
managed by experts on the outside. Over the years, motives for
outsourcing broadened beyond cost control. The
next section examines factors and risks to be considered in
making the outsourcing decision. The sourcing strategy
suggested by the answers to the key how to source question and
associated risks are listed in Figure$10.2.
Factors in the Outsourcing Decision
Under what conditions would an organization decide to

13. outsource? There are three primary factors that are likely to
favor the decision to seek to buy the services or products of an
outsourcing provider: lower costs due to economies
of scale, ability to handle processing peaks, and the client
company’s need to consolidate data centers. These and
other factors are listed in Figure$10.2.
One of the most common reasons given for outsourcing is the
desire to reduce costs. Outsourcing providers
derive savings from economies of scale that client companies
often cannot realize. Outsourcing providers achieve
these economies through centralized (often “greener”) data
centers, preferential contracts with suppliers, and large
pools of technical expertise. Most often, enterprises lack such
resources on a suf"cient scale within their own
IS departments. For example, a single company may need only
5,000 PCs, but an outsourcing provider might
negotiate a contract for 50,000 to spread over many clients and
at a much lower cost per computer. Second, the
outsourcing provider’s larger pool of resources than the client
company’s allows the provider leeway in assign-
ing available capacity to its clients on demand. For instance, at
year!end, an outsourcing provider potentially can
allocate additional mainframe capacity to ensure timely
completion of nightly processing in a manner that would
be impossible for an enterprise running its own bare!bones data
center. Third, an outsourcing provider may help
a client company to consolidate data centers following a merger
or acquisition or when the internal group cannot
overcome the inertia of its top management. Outsourcing may
also offer an infusion of cash as a company sells its
equipment to the outsourcing vendor.
If the service or product involves a core competency, then the
organization should strongly consider insourcing
to protect the bene"ts the organization enjoys from its own

14. competency. However, if the product or service is con-
sidered to be a commodity instead of a core competency, then
there are some distinct advantages to outsourcing. By
bringing in outside expertise, client company management often
can pay more attention to its core activities rather
than to IS operations. Further, if an organization does not have
employees with the training, experience, or skills
in house to successfully implement new technologies, it should
consider outsourcing. This is because outsourcing
providers generally have larger pools of talent with more
current knowledge of advancing technologies and best
practices. For example, many outsourcing providers gain vast
experience solving business intelligence problems
whereas IS staff within a single company would have only
limited experience, if any. That is why client companies
turn to outsourcing providers to help them implement such
technologies as Enterprise 2.0, Web 2.0 tools, cloud
computing, and enterprise resource planning (ERP) systems.
However, it is important to remember that client
company managers are ultimately still responsible for IS
services and products provided to their "rm.
Outsourcing providers also have an added advantage because
they can specialize in IS services. Outsourcing
providers’ extensive experience in dealing with IS professionals
helps them to understand how to hire, manage,
and retain IS staff effectively. Often they can offer IS personnel
a professional environment in which to work that
a typical company cannot afford to build. For example, a Web
designer would have responsibility for one Web site
within a company but for multiple sites when working for an
outsourcing provider. It becomes the outsourcing
provider’s responsibility to "nd, train, and retain highly
marketable IS talent. Outsourcing relieves a client of costly
investments in continuous training to keep its IS staff current
with the newest technologies and the headaches of

15. hiring and retaining highly skilled staff that easily can change
jobs.
Outsourcing Risks
Opponents of outsourcing cite a considerable number of risks
with it (see Figure$10.2). A manager should consider
each of these before making a decision about outsourcing. Each
risk can be mitigated with effective planning and
ongoing management.
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213Sourcing Decision Cycle Framework
6 Stephanie Overby, “The Hidden Costs of Offshore
Outsourcing” (September 1, 2003),
http://www.cio.com/article/29654/The_Hidden_Costs_of_
Offshore_Outsourcing (accessed June 4, 2012).
First, outsourcing requires that a client company surrender a
degree of control over critical aspects of the
enterprise. The potential loss of control could extend to several
areas: project control, scope creep, technologies
employed, costs, "nancial controls, accuracy and clarity of
"nancial reports, and even the company’s IS direction.
By turning over data center operations, for example, a company
puts itself at the mercy of an outsourcing provider’s
ability to manage this function effectively. A manager must
choose an outsourcing provider carefully and negotiate
terms that encourage an effective working relationship.
Second, outsourcing client companies may not adequately
anticipate new technological capabilities when nego-
tiating outsourcing contracts. Outsourcing providers may not

16. recommend so!called bleeding!edge technologies for
fear of losing money in the process of implementation and
support, even if their implementation would best serve
the client company. Thus, poorly planned outsourcing can result
in a loss in IS #exibility. For example, some out-
sourcing providers were slow to adopt social technologies for
their clients because they feared the bene"ts would
not be as tangible as the costs of entering the market. This
reluctance impinged on clients’ ability to realize social
business strategies. To avoid this problem, an outsourcing client
should have a chief technology of"cer (CTO)
or technology group that is charged with learning about and
assessing emerging technologies that can be used to
support its company’s business strategy.
Third, by surrendering IS functions, a client company gives up
any real potential to develop them for compet-
itive advantage—unless, of course, the outsourcing agreement is
sophisticated enough to comprehend developing
such an advantage in tandem with the outsourcing company.
However, the competitive advantage may be compro-
mised if it is made available to the outsourcing provider’s other
clients. Under many circumstances, the outsourcing
provider becomes the primary owner of any technological
solutions that it develops for the client. This allows the
outsourcing provider to leverage the knowledge to bene"t other
clients, possibly even competitors of the initial
client company.
Fourth, contract terms may leave client companies highly
dependent on their outsourcing provider with little
recourse in terms of terminating troublesome provider
relationships. That is, the clients may be locked into an
arrangement that they no longer want. It may be too expensive
to switch to another outsourcing provider should
the contract sour. Despite doing due diligence and background

17. checks, the outsourcing provider may be unreliable
or go out of business before the end of the contract. The risk of
over!reliance for any number of reasons typi-
cally increases as the size of the outsourcing contract increases.
DHL Worldwide Express entrusted 90% of its IT
development and maintenance projects to a large Indian!based
company, Infosys. “There’s a lot of money wrapped
up in a contract this size, so it’s not something you take lightly
or hurry with,” said Ron Kifer, DHL’s Vice President
of Program
Solution
s and Management.6 Clearly, DHL faced considerable risk in
offshoring with Infosys because
of its reliance on the provider.
Fifth, it might be harder to keep its competitive secrets when a
company employs an outsourcing provider.
Although outsourcing providers are sensitive to keeping client
information separated in their systems, an outsourcer’s
staff will usually work with multiple customers. Some managers
are concerned that their company databases are no
longer kept in house, and the outsourcing provider’s other
customers may have easier access to sensitive information.
Although all outsourcing agreements contain clauses to keep
customer data and systems secure, managers still voice

18. concern about data security and process skills when they are
managed by a third party. Thinking through the security
issues carefully and implementing controls where possible
mitigate this risk. Often, the outsourcing provider has
more secure processes and practices in place simply because its
business depends on it—it’s a competitive necessity
and often a core competency of the outsourcing provider.
Sixth, the outsourcing provider’s culture or operations may be
incompatible with that of the client company,
making the delivery of the contracted service or system dif"cult.
Con#icts between the client’s staff and the staff
of the outsourcing provider may delay progress or harm the
quality of the service or product delivered by the out-
sourcing provider.
Finally, although many companies turn to outsourcing because
of perceived cost savings, these savings may
never be realized. Typically, the cost savings are premised on
the old way that the company performed the processes.
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19. 214 Information Systems Sourcing
However, new technologies may usher in new processes, and the
anticipated savings on the old processes become
moot. Further, the outsourcing client is, to some extent, at the
mercy of the outsourcing provider. Increased vol-
umes due to unspeci" ed growth, software upgrades, or new
technologies not anticipated in the contract may end
up costing a " rm considerably more than it anticipated when it
signed the contract. Also, some savings, although
real, may be hard to measure.
Decisions about How to Outsource Successfully
Clearly, the decision about whether to outsource must be made
with adequate care and deliberation. It must be fol-
lowed with numerous other decisions about how to mitigate
outsourcing risks and make the outsourcing arrange-
ment work. Once these decisions have been made, they should
be openly communicated to all relevant stakeholders.
Three major decision areas are selection, contracting, and
scope.
Selection

20. Selection!related decisions focus on " nding compatible
outsourcing providers whose capabilities, managers,
internal operations, technologies, and culture complement those
of the client company. This means that compati-
bility and cultural " t might trump price, especially when
long!term partnerships are envisioned. Selection factors
are discussed more fully in the “where” and “where abroad”
decisions.
Contracting
Many “how” decisions center around the outsourcing contract.
In particular, client companies must ensure that
contract terms allow them the # exibility they require to manage
and, if necessary, sever supplier relationships.
The 10 !year contracts that were so popular in the early 1990s
are being replaced with contracts of shorter duration
lasting 3 to 5 years and full life cycle service contracts that are
broken up into stages. Deal size also has declined
this millennium. Although the numbers of megadeals and
midrange contracts awarded each year have remained
relatively stable since 2002, smaller contracts valued at $100
million or less had more than tripled a decade later. 7
Social Business Lens: Crowdsourcing
Crowdsourcing is a form of outsourcing that is provided

21. by a very large number of individuals. Two forms of
crowdsourcing are available: collaboration and tournament.
Collaboration crowdsourcing occurs when individ-
uals use social media to collectively create a common document
or solution. Examples are Wikipedia or crowd-
sourcing for innovation as was discussed in Chapter$ 5 .
Tournament crowdsourcing also uses social media to solicit
and collect independent solutions from a potentially large
number of individuals but selects one or a few of the
contributions in exchange for ! nancial or non! nancial
compensation.
Some sites offer marketplaces to promote particular types of
tournament crowdsourcing. Consider 99designs
(99designs.com), which is the largest online graphic design
marketplace where people or ! rms can go to get
affordable designs for such things as logos, labels, business
cards, and Web sites. It is anticipated that by 2016,
the site will have over a million members offering graphic
services. Businesses can source graphic design work
by launching design contests to the 99design community,
working individually with designers …