It has been argued in the literature that IT has become a commodity and has evolved to a point where it is now view as a cost to be controlled instead of an investment to provide market leadership (Carr, 2003). It is on this belief that many of the organization around the world lookout for an outsourcer that specialize in IT business and gains profit for the scaling of economies. However, despite the wide belief that outsourcing of a process saves considerable costs, the case with IT Services outsourcing is not as simple as with other services. Different IT services pose different value to various businesses and in considering outsourcing, it needs to be established which IT services are crucial in providing an organization its competitive edge and which are not.
The issue of outsourcing IT services is currently controversial. Though many IT services like network infrastructure or software and hardware maintenance can be considered as commodities, services such as Data Analysis, Software Development as well as IT Decision Making allow companies to be competitive and differentiate themselves from others. In this case, these services can be considered strategic assets and should not be outsourced at all (Constantine, 2004). There are several other considerations which are attached with the process of outsourcing that cannot be ignored. First of all, it is important to consider the level of involvement and integration between the organization and the vendor. The more tightly coupled these two are, the more beneficial the relationship will be. However, in case of large contract, outsourcing may hinder the company’s ability to respond to changes in business environment quickly, thus can bring in more hard then good. Soft cost associated with outsourcing also cannot be ignored .These include ramp up time, cost of knowledge transfer, human capital as well the process of vendor selection. These can be tangibles or intangibles. In case of intangibles, ignoring these could often result in the failure of outsourcing process itself and may cause huge losses to the organization (Tanyi Enow, 2003).
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