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Impacts of Information Technology Outsourcing

Impacts of Information Technology Outsourcing

In the midst of a global economic downturn, corporate top executives stay focused to upturn the organization’s revenue despite cost-effective turbulence. With the continuous effect of the recession, companies consider outsourcing as an additional avenue to reach specific cost-saving objectives.

The prevalence of the business system in the world market can be attributed to the favorable benefits and advantages that it provides. Thus, the multitudes of companies nowadays prefer to outsource some of their tasks.

Along with the global economic struggle is the advent of modern technology, specifically the Internet. It allows the establishment of more online business opportunities in various marketplaces. It also resulted in the emergence of numerous Information Technology industries. In fact, according to the latest survey, 38 percent of software development professionals use outsourcing to adhere to the requirements of their organization.

Below is a list of frequently outsourced IT services based on the survey.

1. Application or software development
2. Web development or hosting
3. Application support or management
4. Technical support or help desk

Information technology outsourcing can affect every aspect of any local business, as well as the global industries. Hence, it is important to identify the pros and cons. Its effective management can result to:

Low Cost of Labor

Third-party services are only utilized when a need arises. Thus, companies that transfer their tasks to this practice are obliged to compensate for the actual service hours consumed. Moreover, outsourced labor is far low-priced than maintaining full-time employees.

Low Capital Cost

It allows companies to obtain a good source of IT experts at a fraction of the cost of hiring an entire team. In addition, since services are being outsourced, investment in IT infrastructure is lower compared to the cost of investing for a full in-house IT team.

Better Quality of Work

The presence of a third-party service provider allows companies to have access to top-of-the-line IT professionals at reasonably affordable costs. A company is able to hire an entire team of well-educated IT experts and quality technical staff that possess many years of experience in hardware and software technologies.

Although it presents a number of positive benefits, it is not without disadvantages. Mismanaged of this system can lead to:

• workers losing their jobs
• loss of investment
• customer disappointment

The transfer of jobs from local to overseas has various effects both on the local and overseas employment. In particular, Information Technology outsourcing has the following impacts all across the globe.

• This occurs mostly in developing countries like China, India, Pakistan, and the Philippines where labor cost is less expensive. Therefore, the upsurge of IT jobs in these countries is expected. Meanwhile, IT workers in the U.S. is now experiencing the diminution of IT job opportunities.

• The business system has a huge impact on the economy of underdeveloped or developing countries. Since these countries serve as a third-party service provider, it triggers job creation to ensure that all incoming service requests are fulfilled and properly managed.

• When an organization outsourced its services to the least developed country, salaries of IT experts will increase, and consequently it helps to improve the living standards of the people in that particular nation.

• The drastic economic change in the IT industry due to this business trend can be reasonably nerve-wracking to IT students. This is because they may understandably begin to question their choice of career.


Hi, this is Vyasa. I have experience in working in quite a lot of industries and over the years whatever experience I have gained, I share it here. I hope that you would enjoy your time reading all the contents that are being shared by me here. Have a pleasant time here.

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