Thesis: Should Companies Outsource Information Technology Function

Sample Thesis Paper

Increasing technical complexity in developing firm-specific applications, rising labor costs for software maintenance and rapid obsolescence of information technology favor the shifting of internal IT costs to externally purchased services. Hence the need for outsourcing information technology function arises. Perhaps the most crucial contemporary issue of information management has become whether to outsource all or some of the information technologies to specialized-services firms. The issue is not a transient phenomenon; the shift from company-management computing to outsourcing is accelerating. The decision when, how, and where to outsource is likely to be one of the few information-management issues that will be coming up for review at board meetings.

Some corporations claim that their information technologies are not an essential part of their business anymore but, rather, like electric power or the water supply. For others, the divestment of routine processing is expected to make it possible to concentrate on strategic systems. One also hears that outsourcing is preferable because the contractors offer technical expertise that the firm cannot muster by other means. According to Strassmann, so far there is only one good explanation that fits almost every case of outsourcing information technologies: The outsourcing corporations are trying to return to profitability by cutting costs.

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