Implications of Outsourcing in IT-Management

Seminar paper from the year 2021 in the subject Computer Science - Commercial Information Technology, grade: 2,0, University of Applied Sciences Bonn, language: English, abstract: This paper takes a closer look at aspects surrounding the importance and application of IT outsourcing and aims to provide a sound understanding of the term as well as the forms of outsourcing strategy in today¿s IT-based or IT-driven industries. Since outsourcing is a subject that is not necessarily only associated with advantages, a closer look at the disadvantages of outsourcing will also be taken in the course of this paper.

Outsourcing has become increasingly popular as a technique to reduce costs and to access a wider range of technical expertise (in-house competencies versus outsourcing noncore competencies). Especially concerning the second example, outsourcing has become a standard method of project and labour management if a firm decides to migrate to a newer technology. In the IT industry, companies may outsource system development, system operations, help desk, systems, databases, and application administration, as well as a desktop and network support. Furthermore, businesses may use outsourcing to obtain application service provision or business process outsourcing.

Considering an IT activity a commodity, there is little benefit to doing it internally. Payroll processing, for instance, is often considered a commodity IT activity. In these cases, focused vendors are likely capable of providing the service at a higher level of quality and/or at a lower cost. By taking advantage of economies of scale that other organizations have, a business that specializes in the same field can become more cost-effective. With respect to the given advantages, outsourcing of IT resources and services is proving to be an increasing trend on the global market. Companies such as cloud providers specializing in many manifestations of IT outsourcing (Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Software as a Service (SaaS)) show a growing turnover, which is expected to increase further in the forecast beyond 2021.