Outsourcing is the activity of contracting other specialised companies to perform the business processes that organisations can't or do not wish to undertake themselves. Traditionally, IT outsourcing has involved an external service provider being engaged via a formal contract to deliver part or all IT functions to achieve specified results. The contracts are usually for a fixed price and for a specified period of up to ten years. Services that are outsourced vary greatly, being based upon the requirements of each organisation. These services include IT service/help desk, LAN/WAN management, desktop services, mainframe operations, web hosting and application management and support. To date, outsourcing contracts have not usually included applications development, IT&T security policies, or strategic planning, as many organisations see these aspects as critical to their business. Outsourcing vendors are also commonly involved with addressing support and manpower shortage issues.
Companies are increasingly outsourcing the management of information technology (IT) for reasons that include concern for cost and quality, lagging IT performance, supplier pressure, access to special technical and application skills, and other financial factors.
Recommedations for a successful outsource include establishing a flexible contract, forming a partnership and clearly identifying scope and responsibilities. The massive move to outsourcing presents a series of new challenges for organisations, both public and private. With the increasing demands on organisations to gain greater access to cutting-edge technologies, to highly skilled people, and to exit non-core activities, organisations are seeing IT outsourcing as the way forward. .
There are many reasons why private and public sector organisations decide to outsource IT. The most compelling benefit of outsourcing is cost savings, which, by some estimates, is 20 to 40 percent less than the expense of maintaining the same function or process in-house (U.