Question

What are the benefits and risks of outsourcing IT services?

Answer 1

The risks of It outsourcing have the following reason:

1. Loss of control over the management aspect

Which can be attributed to the fact that the company handling the outsourced processes might not have the most capable infrastructure and information system management which becomes problematic for our company since our processes would be affected.

2. Skills, ability, infrastructure

Since there is a requirement for a business to be the best in their market in order to create the required differentiation in the market, we can say that the fact that the company handling the outsourcing responsibilities can have inexperienced staff, incompetent resources or even bad infrastructure can be considered as a risk.

3. Hidden cost

There can be a number of hidden costs that can occur as a result. The future is always uncertain and all the variables cannot be calculated. It might, therefore, pose as a risk since the process might become unsustainable.

4. MArket uncertainty

While our company might be able to handle the market uncertainty, the company handling the outsourcing responsibility might not be as robust and this can cause a gap in our own ability to function properly.

5. Loss of innovation

Since we are not performing our own functions, we might not be able to create the required competency in structure and function which would be required in the market in order to deal with the future competition.