Issues and Implications in an Information Technology Outsourcing Relationship

Abstract

IT outsourcing is an arrangement in which a company subcontracts its information technology related activities to be executed by a different company. In the past several decades, as the role of information technology grew in the performance of a company, the fixed cost of maintaining up and running IT facilities and staffs was increasing as well. Therefore outsourcing solution was derived from companies‘ need to achieve superior performance of IT functions with minimum amount of cost. Major classifications of IT functions that companies outsource are infrastructure and applications. Infrastructure outsourcing refers to a company resolving its entire IT activities handled by a contracted vendor company on the company‘s behalf. Application outsourcing stands for a company subcontracting only its core IT applications such as ERP systems, document management systems or Business intelligence applications with service provider. Though the IT Outsourcing process might be a useful activity for the growth and resources of a service provider‘s organization but at the same time it has some issues with multiple implications that need to be analyzed in detail. In this paper we take a look at IT Outsourcing process and analytically evaluate its effects on future growth of an organization.