Application Management Outsourcing

Definition of Application Management Outsourcing

Application Management Outsourcing (AMO) refers to the practice of hiring a third-party company to manage and maintain an organization’s software applications. Typically, this includes tasks such as software development, maintenance, enhancement, and support. Through AMO, organizations can streamline their processes, reduce operational costs, and better focus on their core business activities.


The phonetic transcription of the keyword “Application Management Outsourcing” would be:/ˌæplɪˈkeɪʃən mænədʒmənt ˌaʊtˈsɔrsɪŋ/Here is a breakdown of the pronunciation of each word:- Application: /ˌæplɪˈkeɪʃən/- Management: /mænədʒmənt/- Outsourcing: /ˌaʊtˈsɔrsɪŋ/

Key Takeaways

  1. Application Management Outsourcing enables businesses to delegate the responsibility for maintaining, operating, and enhancing their application portfolio to a team of external experts. This can help to reduce operational costs and improve productivity.
  2. When properly managed, Application Management Outsourcing can help organizations to focus on their core competencies and strategic initiatives, freeing up valuable internal resources for more value-added tasks. It also allows businesses to gain access to industry best practices, innovation, and advanced technology solutions.
  3. Choosing the right Application Management Outsourcing partner is critical to ensuring project success, considering factors such as experience, industry knowledge, communication, and flexibility. Organizations must work closely with their outsourcing provider to establish a clear governance model and service level agreements that align with their business objectives and performance metrics.

Importance of Application Management Outsourcing

Application Management Outsourcing (AMO) is important because it allows businesses to delegate the responsibility of managing and maintaining their software applications to specialized external service providers.

This not only ensures that organizations have access to a diverse pool of expertise, ultimately enhancing the software’s performance, but also enables them to focus on their core business objectives.

Furthermore, AMO aids in cost reduction, as operational expenses can be significantly lowered by outsourcing, and the scalability offered by AMO providers ensures that a business’s software needs are met efficiently and sustainably.

In an increasingly competitive and technology-driven business landscape, companies must continuously adapt with agility, and AMO plays a vital role in facilitating that process.


Application Management Outsourcing (AMO) is a strategic solution that organizations adopt to streamline their business processes and enhance overall efficiency. Its primary purpose is to delegate the day-to-day management, maintenance, and optimization of an organization’s software applications to a third-party service provider, allowing the organization to focus on its core business operations and objectives. Through AMO, businesses can tap into the specialized expertise of external partners to meet complex application requirements, implement innovative solutions, and improve operational agility.

This translates into increased productivity, reduced operating costs, and better risk management, giving organizations a competitive edge in the fast-paced business landscape. One of the main uses of Application Management Outsourcing is to facilitate cost-effective scalability and flexibility in the evolving IT environment. As organizational needs change and technology advances, managing a diverse array of software applications can become a time-consuming and resource-intensive task.

By outsourcing this aspect to a dedicated service provider, businesses can ensure they have access to the latest technologies, industry best practices, and skilled professionals without incurring hefty recruitment or training expenses. This approach enables businesses to expand and evolve their IT infrastructure with minimal disruptions, addressing changing needs, and facilitating growth. Moreover, AMO service providers implement performance monitoring, continuous improvement strategies, and robust disaster recovery plans, which can greatly enhance the overall stability and security of the organization’s software environment.

Examples of Application Management Outsourcing

Application Management Outsourcing (AMO) is a popular practice in which companies delegate the management, maintenance, and support of their applications to external service providers. This allows businesses to focus on their core competencies and achieve better cost efficiency. Here are three real-world examples of companies implementing AMO:

Procter & Gamble (P&G):P&G, a multinational consumer goods company, has been a forerunner in adopting Application Management Outsourcing. In 2003, they entered into a 10-year, $3 billion outsourcing agreement with HP (Hewlett-Packard) and IBM. This partnership enabled P&G to outsource the management of its IT infrastructure and applications, resulting in substantial cost reductions, streamlined business processes, and enhanced scalability.

General Motors (GM):In 2012, General Motors, one of the leading automotive manufacturers, signed a multi-year, multi-billion dollar application management outsourcing contract with HP. Under this agreement, GM outsourced the development and management of its business applications and platforms to HP, which helped GM significantly cut costs, modernize its IT infrastructure, and enhance its competitiveness in the global market.

Deutsche Bank:Deutsche Bank, a leading global financial institution, outsourced its application management to Tata Consultancy Services (TCS) in

The contract aimed to handle operations and performance optimization of the bank’s digital assets. Through this partnership, Deutsche Bank has been able to standardize and centralize its IT systems, reduce operational costs, and improve service quality, benefiting both employees and customers.

Application Management Outsourcing

What is Application Management Outsourcing?

Application Management Outsourcing (AMO) is the process of entrusting a third-party service provider with the responsibility of managing and maintaining your company’s software applications. This may include application development, support, updates, and maintenance, thereby allowing your organization to focus on its core business activities.

What are the benefits of Application Management Outsourcing?

Some of the key benefits of Application Management Outsourcing include cost savings, access to expert knowledge and resources, improved efficiency and productivity, reduced risks, and the ability to focus on core business functions. It also helps organizations to stay up-to-date with the latest technology trends and maintain a competitive edge in the market.

How to choose the right Application Management Outsourcing provider?

When choosing an AMO provider, consider factors such as the provider’s experience, expertise in your industry and technology stack, proven track record, service level agreements, and the ability to scale. It is also essential to assess their communication skills, transparency, flexibility, and security practices before making a decision.

What services are included in Application Management Outsourcing?

Application Management Outsourcing typically includes various services such as application development, application maintenance and support, application integration, application modernization, cloud migration and management, security assessments, performance monitoring and optimization, and quality assurance testing.

Is Application Management Outsourcing secure?

Security is a critical concern when outsourcing application management. A reputable AMO provider will have robust security measures in place to protect your applications and data. It is important to verify their security certifications, protocols, and practices before partnering with them. You should also establish clear security guidelines and expectations in your service level agreements to minimize potential risks.

Related Technology Terms

  • IT Service Provider
  • Application Maintenance
  • Service Level Agreements
  • Remote Infrastructure Management
  • Business Process Outsourcing

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