IT/IS Outsourcing in Large Companies – Motivations and Benefits

IT/IS Outsourcing in Large Companies – Motivations and Benefits


What are the motivations for large companies to outsource IT/IS?

The motivations for large companies to outsource IT/IS are typically cost savings, improvement of return on investment and better service. The outsourcing company can provide a more economical solution that is not only cost effective but also scalable. Outsourcing is a way for companies to free up their internal resources so that they can better focus on core competencies and products.

What are the benefits of outsourcing IT/IS for large companies?

The benefits of outsourcing IT/IS to a company like CGI include:

• Improved efficiency and scalability for large companies. The outsourcing company can provide more cost-effective solutions that are scalable to the needs of the client.

• A reduction in the cost of IT/IS. Companies can maintain their core competencies while outsourcing non-core activities to a company that specializes in those areas.

• Better customer service and satisfaction. Outsourcing allows companies to provide better service at a lower cost than they could with in-house staff.

• A reduction in the number of employees required to manage IT/IS.

How does outsourcing IT/IS help large companies to be more competitive?

Large companies who outsource IT/IS functions to external providers are able to focus on their core competencies, and in doing so they become more competitive. The benefits of outsourcing include reduced costs, improved service, reduced risk, and the ability to focus on their core competencies.

What are the trends in IT/IS outsourcing among large companies?

A recent study by the Aberdeen Group found that outsourcing IT and IS is becoming more popular.

Outsourcing tends to be a cost-effective way for large companies to manage their information technology and business process outsourcing needs.

Aberdeen Group’s research found that the use of outsourced IT has increased by 30% in large companies over a five-year period, while similar trends were not found in small companies.

The study also revealed that the primary reason for outsourcing IT was to reduce costs, while improved service and access to new technology were also cited as benefits of outsourcing.

What are the challenges faced by large companies when outsourcing IT/IS?

Large companies are faced with the challenge of replacing their current IT staff. With an ever-growing need for computer knowledge, it becomes difficult to find experts in this field who can handle all aspects of this.

The other challenge is that of staff retention, where the company’s best people will go to work for a competitor if they are not paid enough or given opportunities for advancement. The benefits of outsourcing are that the company can focus on its core business, and not have to worry about the IT staff.

A survey was conducted in 2007, where a number of large companies were asked why they outsourced their IT needs. The reasons mentioned were:

·        To cut costs

·        To focus on core business activities and not have to worry about the day-to-day IT operations

·        To get a more reliable service.

The companies that were surveyed included:

·        Procter & Gamble, the largest consumer products company in the world

·        General Motors, the largest automobile company in the US

·        Cisco Systems, a leading networking company.

The results of this survey showed that the top two reasons for outsourcing were to cut costs and focus on core business activities.

This is because the cost of IT outsourcing has fallen dramatically over the last few years. Also, it makes sense to focus on core business activities as opposed to managing an IT function.

The survey also showed that the top three benefits of outsourcing were:

·        Cost savings (40%)

·        Increased flexibility (30%)

·        Improved quality and stability of the IT services provided (20%)

The survey also showed that the top three problems with outsourcing were:

·        Lack of control over service quality and delivery (30%)

·         Lack of in-house expertise (28%)

·        Inability to manage service quality and delivery internally (20%)

Analysis: What is the difference between “control over service quality and delivery” and “lack of in-house expertise”? I think the second one should be something like: “Lack of internal resources to manage service quality and delivery”.

What are the best practices in IT/IS outsourcing for large companies?

One of the most important things to understand about IT/IS outsourcing for large companies is that it has a lot to do with understanding the benefits and motivations behind having outsourced services. There are a number of different ways to approach the subject, but one thing that is important to understand right off the bat is that this process has a lot more to do with what your company wants and needs than it does with what your company can get.

How can large companies ensure successful IT/IS outsourcing?

Advantages of outsourcing IT/IS include the ability to reduce costs, improve efficiency, and increase quality. There are several ways that a company can achieve these benefits: by reducing in-house staff, by outsourcing only specific projects and tasks rather than the entire function, or by making use of off-shore resources.

The benefits are also dependent on the type of company that outsources. In large companies, it is common to see IT/IS outsourced in order to reduce costs and increase efficiency. However, smaller companies are more likely to outsource for the purpose of improving quality.

Smaller companies are often unable to provide the same level of quality for their technology as larger companies, and therefore must seek help in order to improve their products. They can do this by outsourcing their technology to larger companies, who have the resources and expertise to provide them with better quality. In addition, smaller companies often lack the necessary funds and personnel in order to invest in developing new technologies. Therefore, they often outsource their technology to larger companies that have the funding and personnel in order to develop new technologies.