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Is it better to do outsourcing with the software vendor as a provider? What are the pros and cons? How does your answer change for implementation projects as opposed to running live systems/applications?
I think that is better to do outsourcing with a software provider because, more or less, they already have knowledge on outsourcing and the whole process. Software vendors have already established a name for themselves and can provide the quality that you need. What you should do is make sure that you pick a software vendor which meets your criteria as well as your budget range.