advantages and disadvantages of outsourcing it

Advantages and Disadvantages of Outsourcing IT

Information Technology Outsourcing (ITO) is the process of making a contract with another company or an individual to do a particular service or task. This contract could last for several years and may involve millions of dollars. There is only a slight difference between ITO and other kinds of outsourcing. Some of the prevailing ITOs and Business Process Outsourcing (BPO) companies in the market today are IBM, EDS, CSC, HP, ACS, Accenture and Capgemini (Rock, 2003).


IT outsourcing is a very efficient way of stretching a company’s budget. Most companies are aiming for at least a 30% decrease in expenditures through outsourcing. Evidently, there are also some possibilities of failing, but if the company outsources carefully, the company can achieve more than what they can accomplish on their own. In addition, if the company transacts with a highly qualified vendor, they will be able to gain expertise in support of their own IT capacity. They will also have more edge in a highly competitive market (Rock, 2003).


Pitfalls of outsourcing IT could come in different forms. Loss of control over the outsourced project, or even just part of it, is inevitable. Exchange of necessary data is required so there is always a possibility that the vendor can access confidential information which is vital to the company. Communication also plays a huge role in the success of the project; thus, in dealing with overseas vendors, issues such as time, language and/or cultural differences have to be dealt with. Having a mix up on these aspects can certainly define the outcome of the project (Rock, 2003).

In conclusion, if a small organization does not have the capacity in skills and/or budget to implement a vital project on its own, outsourcing – in full or part – to an outside company appears to be the best solution they can have. However, certain caution should always be considered in order to maximize the full potential of the benefits and rewards that outsourcing entails.


Rock, S. (2003). Outsourcing IT: What to Outsource, Avoiding Pitfalls, Measuring Success, the

Impact of the Internet. London: Caspian.

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