cloud sourcing

Cloud sourcing is an arrangement in which a company pays a third-party cloud hosting provider to deliver and support IT services that could be provided in-house. Cloud sourcing is similar to outsourcing, but the cost for cloud computing services is usually based on a per-use utility model instead of an annual or monthly contract.

Cloud computing refers to the delivery of hosted IT services over a network, such as the internet. It enables an organization and its users to access and deploy resources -- including virtual infrastructure, storage, development tools and even full applications -- that are hosted by a third-party provider, rather than having to implement and maintain those resources in-house.

With cloud sourcing, an organization not only has access to these types of hosted services, but generally relies on the provider to support, maintain and manage those services on its behalf. This is the same paradigm used in traditional IT outsourcing.

Cloud sourcing pros and cons

Cloud sourcing, like general IT outsourcing, can help an organization reduce on-premises infrastructure costs and increase operational efficiency. It can also minimize the time an IT team needs to spend on manual and repetitive tasks and allow them to focus instead on more strategic projects that bring greater value to the business.

A company that uses cloud sourcing, however, can also face some potential challenges. For example, as is sometimes the case with cloud technology, in general, an organization might fear losing direct control over IT resources and processes when they move to a cloud sourcing model. This is especially true when an enterprise has strict security and compliance requirements.

What's more, cloud sourcing might require an organization to dedicate specific resources and staff to manage the relationship, as well as the service-level agreements, that come with the use of a third-party provider.

This was last updated in May 2018

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