Outsourcing of IT Department - Case Study Example

One of the reasons that XYZ Company should outsource IT functions is cost since it is one of the most expensive functions of the company, as far as establishment and maintenance are concerned. Vendors with several clients can; however, operate at lower costs than a single organization would do.

Another justification for their outsourcing of IT function is that it will improve performance. The vendor will have more expertise since they face more varied issues (Desai, 2009). To outsource the function, however, XYZ Company needs to identify first the need for outsourcing (McIvor, 2012). The company should do an internal assessment on why they want to outsource and whether it is due to the failure of the internal staff. Next, the company should recognize the IT tasks that they should outsource and those that must be retained in-house.

The company should seek to outsource services that are already mature and available in the marketplace. Those tasks that should be outsourced should be competitive in the marketplace to get the best price (McIvor, 2012). XYZ will contend various costs with when it comes to outsourcing IT functions. The first is the cost of searching for a vendor and contracting (Willcocks et al, 2011).