IT Resources (Outsource or Insource) - Essay Example

Outsourcing and Insourcing have merits and demerits as far as an IT organization is concerned. This paper briefly compares the merits and demerits of outsourcing and insourcing. Outsourcing helps IT companies to exploit the cheap and efficient labour market of the foreign countries. For example, India is a country in which lot of IT professionals are searching for jobs whereas America is a country which searches for IT professionals. In other words, insourcing would be a costly affair in America compared to outsourcing.

The IT job which may cost $ 10000 in America can be completed from India for around $ 5000. In short outsourcing is cost effective compared to insourcing. Tax benefits are another advantage enjoyed by the IT companies as far as outsourcing is concerned. Outsourcing jobs were exempted from heavy taxes since it is completed in another country. Outsourcing increases the capabilities of an IT company as far as their production capacity is concerned. For example, a company cannot take large volume of works or works beyond its capacity if it is strictly adhere to insourcing.

On the other hand, there is no limit for an It company for taking orders if it opt for outsourcing. In fact, software developers are the larger segment of an IT organization as far as total employees of an IT organization are concerned. Outsourcing will help an organization to keep only the required staff permanently and there is no need for that organization to keep more production staff even at off seasons. Outsourcing helps the IT companies pay only for the services they receive. In other words, nonproductive costs will be considerably reduced if a company opts for outsourcing.

Thus, Operational control is more in insorcing than in outsourcing. For example, an IT company can speed up the production processes if it is going on in the same country whereas it is difficult to speed up the production processes if it is going on in a foreign country. Communication problems may not be there if the production processes are done domestically whereas in outsourcing communication problems between the outsourcer and outsourcee can take place. Increased competitive power is another advantage of outsourcing.

“Outsourcing can give your business a competitive advantage as you will be able to increase productivity in all the areas of your business” (The Advantages and Disadvantages of Outsourcing, 2009). Outsourcing will help an IT organization to undertake jobs beyond their expertise. For example, if a particular software expert is not available with an IT organization, it can opt for outsourcing for getting that job done. Thus the organization can take jobs even beyond the areas of its expertise and thereby it can increase its competitive power.

The possibility of exploitation of better technologies is another advantage of outsourcing. It is not necessary that IT functions developed equally in two different countries. For example, African countries are technologically weaker countries. It is possible for these countries to access better technologies from other countries with the help of outsourcing. Better managerial control is the major advantage of insourcing over outsourcing. When a job is performed domestically, the managers can ensure that it meets all the requirements.

On the other hand the managers will get the taste of the finished product only after the completion of the