Comprehensive Analysis: Does IT Outsourcing Enhance IT Capabilities?

This report critically examines the impact of IT outsourcing on IT performance, arguing that outsourcing does not inherently improve IT due to various challenges. The analysis identifies key issues, including potential negative impacts on the expertise of IT professionals, communication gaps, the risk of losing confidential information, hidden costs, and difficulties in IT alignment. The report emphasizes that outsourcing can affect IT alignment due to poor communication stemming from cultural barriers. It further addresses the problems associated with continuous innovation and skill development in an outsourcing environment. To overcome these challenges, the report suggests solutions such as knowledge management, cost control, implementation of new technologies, and IT alignment frameworks. The conclusion highlights the importance of proactive measures to improve the relationship with employees, customers, and service providers, ultimately improving IT with the help of outsourcing. The research also mentions potential benefits of outsourcing, such as improved returns, minimized risks, and improved service quality. This research will help scholars can enhance their knowledge in the area of IT and outsourcing.

Does Outsourcing improve
IT?

Table of Contents
INTRODUCTION...........................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Concerning the subject of the project, outsourcing will not improve the IT because it will
face various challenges or issues.
The first problem is regarding professional IT people. Use of outsourcing can affect the
working capabilities, performance, and expertise of the IT employees as it will not provide many
opportunities to the workers to represent their technical skills. Along with this, outsourcing
companies will face communication gap between employees which can affect the productivity
and profitability. Another problem is a risk of losing confidential information like medical
records, payroll, etc. which will be transmitted to the outsourcing firm (IT Outsourcing. 2017).
The second issue is regarding infrastructure and cost. Companies use IT outsourcing for
reducing investment in IT, but from a survey, it has been found that 44% firms are not getting
any benefit with respect to cost savings. Hidden costs such as maintenance and upgrade cost
results to occur financial issues in organizations (Gobble, 2013).
The third point is IT alignment which plays an essential role in improving the
competitiveness and profit for the enterprises. Close communication and good governance are
key factors of IT alignment. Thus, outsourcing will affect IT alignment of the companies because
it results in poor communication due to culture barriers between client and provider. The last
issue is regarding continuous innovation and related improvement in the field of outsourcing (Li,
Huang, Li, Chen and Xiang, 2014).
Gaining opportunities for developing IT skills and developing effective working culture
for removing communication gaps is quite difficult process in the field of outsourcing.
Outsourcing will not improve IT until unless necessary steps cannot be taken by the
organizations. These solutions can be related to the knowledge management, controlling IT
costs, implementing new technologies, using useful framework and management for IT
alignment. (Oshri, Kotlarsky and Willcocks, 2015).
CONCLUSION
From the above, it is clear that Outsourcing will not improve IT due to the availability of
different problems regarding IT alignment, Professional IT people, infrastructure and cost and IT
innovation. Outsourcing requires less technical skills which make IT professionals to lose their
valuable positions, have poor communication between the customer and service provider,

increases communication gap due to different culture and background, consists hidden costs
which result to affect the profitability and working of an organization. All these problems affect
the management, financial situation, development and profit margin of the companies. These
issues are necessary to improve and handle for enhancing the use of outsourcing in IT field
(Chaudhuri and Chatterjee, 2017).
By taking practical actions like using knowledge management for developing skills and
abilities of the internal staff members, use of on-site outsourcing can lead to integrate IT
employees with the skills and knowledge required by the companies, by improving management
processes, increasing communication between client and provider, using latest techniques like
CRM (Customer Relationship Model), ERP (Enterprise Resource Product), databases, etc. will
help in improving the IT field with the help of outsourcing. All these factors will result to
improve and enhance the relationship with employees, customers and service providers by
decreasing the adverse effect.
Concerning implications of research, outsourcing can lead to improve returns, minimize
the risk and improve the quality of services and speed of delivery which will help in developing
IT. Along with this, by providing training regarding the work company will able to enhance
skills of the workers. Outsourcing organizations can hire skilled and experienced IT
professionals for improving the quality of work and performance (Fountain, 2016).
This research will help scholars can enhance their knowledge in the area of IT and
outsourcing. IT professionals and companies will able to understand the issues caused by
outsourcing. This study will also provide proper solutions to the outsourcing organizations for
improving the issues they are facing and gaining competitive advantages. The investigation can
be expanded in future by using scopes like benefits and disadvantages of outsourcing, the impact
of outsourcing in developing the economy, use of latest techniques for outsourcing, etc.

REFERENCES
Journals and Books
Chaudhuri, S. and Chatterjee, J., 2017, January. The Dark Side of Outsourcing: Outsourcing
Scope, Vendor Relations & Value Creation in IT Services. In Academy of Management
Proceedings (Vol. 2017, No. 1, p. 17396). Academy of Management.
Fountain, J.W., 2016. Outsourcing of Building Information Modeling (BIM) Among General
Contractors in the United States.
Gobble, M.M., 2013. Outsourcing innovation. Research-Technology Management, 56(4), pp.64-
67.
Li, J., Huang, X., Li, J., Chen, X. and Xiang, Y., 2014. Securely outsourcing attribute-based
encryption with checkability. IEEE Transactions on Parallel and Distributed Systems, 25(8),
pp.2201-2210.
Oshri, I., Kotlarsky, J. and Willcocks, L.P., 2015. The Handbook of Global Outsourcing and
Offshoring 3rd Edition. Springer.
Online
IT Outsourcing. 2017. [Online]. Available Through: <http://www.gartner.com/it-glossary/it-
outsourcing/>. [Accessed on 14th September 2017]