WHAT’S THE TRUE COST OF OUTSOURCING IN IT DEPARTMENTS? 2
What’s the true cost of outsourcing in IT departments?
Generally, outsourcing enables a company to hire third parties to perform some of its
non-core activities hence, allowing the company to focus better on the core activities of
production. Notably, in doing this a company transfers all responsibilities of that production line
such as staff recruitment, equipment acquisition etc. thereby reducing costs of production.
Although outsourcing is popular in the contemporary world, it is important to understand the real
hidden costs of outsourcing in tech companies as well as IT departments.
Although the short-term results of outsourcing are satisfying, the long-term results of
outsourcing could be devastating. Worth a note, the cost of outsourcing in the technology fields
is relative to the rate of change in technology advancements and requirements, both hardware
and software. According to Mello (2015), if a company’s server and storage needs to grow at a
rate of 17% annually, there are high chances that the cost of outsourcing will grow at the same
rate. As a result, the cost of outsourcing will grow to 87% at the end of a five-year contract.
Consequently, although the initial cost of outsourcing was manageable and cost friendly, the
final cost may pose a threat to the sustainability of the outsourcing company.
Practically, every business enterprise or company aims to maximize its profits while
keeping its expenses to a minimal value. Therefore, the outsourcing company will not update any
equipment or software whose contribution to the income is little or negligible. However, Rossi
(2015) explains that most outsourced companies do periodical updates to maintain quality as
well as updated technological services to their customers. Consequently, the outsourced
company distributes its cost of updating on the customers hence making the customer companies
spend unnecessarily more on outsourcing. As a result, the cost of outsourcing increase gradually
within the contractual period and may cost any company more than expected if not closely
