case #4 IT Outsourcing

What is IT outsourcing?

☻☻Information Technology Outsourcing or ITO is a company's outsourcing of computer or Internet related work, such as programming, to other companies. It is used in reference to Business Process Outsourcing or BPO, which is the outsourcing of the work that does not require much of technical skills.


☻☻Advantage☻☻
The benefits of outsourcing are:

Less capital expenditure - For example, by outsourcing information technology requirements, a company does not have to buy expensive hardware and software.

Less management headache - For example, by outsourcing business process such as accounting, a company no longer has to hire and manage accounting personnel.

Focus on core competencies - Outsourcing non-core related processes will allow a business to focus more on it's core competencies and strengths, giving it a competitive advantage.

☻☻Disadvantage☻☻

Before deciding on outsourcing your company's business process, keep in mind the disadvantages of outsourcing:

Less managerial control - It may be harder to manage the outsourcing service provider as compared to managing your own employees.

Outsourcing company goes out of business - If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house.

May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to outsourcing.

Security and confidentiality issues - If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider.

☻☻Implication☻☻

The jobs in India created due to outsourcing are mainly back office and research and development jobs such as Call centers, transaction processing, Chip design, Software development services, financial research, medical transcription, IT consulting, product design, tax processing and the like. These outsourcing jobs are mainly seen in the financial, insurance, technical, software and banking sectors.