rred to as "hard costs") there are tremendous marketing soft costs that must be factored into the equation.
For building an E-Commerce site is really only half the economic battle. The other half is getting customers in Cyberspace to utilize the company's E-commerce service.
"The [outsourcing] customer can also save on taxes: While hardware must be depreciated over three to five years, outsourcing fees are deductible as a current business expense" (Halvey & Melby 81). Corporations gain other benefits. As computers evolve, many lack the resources to keep up with new information-processing technology. However, if those same companies outsource to companies that have computing as its primary business, the corporation benefits from economies of scale.
Kodak was one of the first large American companies that have turned all of its E-Commerce over to outsourcing. Explaining this decision to shareholders, management stated y Kodak contends that outsourcing makes sense strategically as well as economically. "Kodak believes it should focus on what it does best and farm out other functions. The photo giant does not consider running mainframes one of its core competencies," (Kirkpatrck 103).
Kodak had immediate and dramatic results. Capital spending for computing dropped 90% and operating expenses have fallen 10% to 20% -- for a combined annual saving of around 40%. That could amount to as much $130 million over ten years, based on outside estimates. The pie chart below shows how th
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