Why do companies outsource their IT services? Is it always successful?.
This paper describes what outsourcing is, and why it has been an increasing attractive business option in these modern times. Also it talks about why major companies outsource their IT services. .
Discussions are also made on the risks involved in outsourcing.
Outsourcing is the contracting of a company's non-core, non-revenue-producing activities to specialists.
Simply, it is the transfer of operational responsibility of either business processes or infrastructure management to an external service provider.
Although outsourcing is not a new concept, it's increasing acceptance among corporations as a mainstream alternative to in-house operations, as well as supplementation of IT services, has propelled significant growth over the several years. .
The two main types of outsourcing are Information technology (IT) Outsourcing and Business Process Outsourcing (BPO). BPO includes outsourcing related to accounting, Human Resources (HR), benefits, payroll, and finance functions and activities.
Why outsourcing .
Outsourcing is an increasing attractive business option because overall, companies tend to outsource to alleviate administrative burdens and focus on strategic areas.
There is no profit for companies in administering non-revenue activities such as payroll and tax filing, health benefit administration, workers' compensation coverage, safety training and regulatory compliance management. So why devote valuable time and resources to these functions? .
Instead, a lot of companies, large or small, are off-loading a variety of non-strategic functions to external service providers so they can concentrate on more competitive business opportunities.
As companies look for ways to improve profitability and streamline the efficiency of their operations, the practice of outsourcing parts of the operations has become increasingly attractive business option over recent years.