Explain advantages and disadvantages of Outsourcing

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Question:- Explain what outsourcing is and the advantages and disadvantages it can bring to an organisation’s IT function.

Outsourcing: Contractual agreement between an organization and 3rd party (external) to provide and support the organization IT related activities/function.It is done by providing the resources to the organization at their premises or at external organization premises.

The contract will be defined with SLA and the price is agreed to the model that is agreed to work.

The responsibility is with 3rd party organization to complete the work and accountability is the original organization who is outsourcing.


Save Time:

Outsourcing the non -critical tasks eg back office mundane work will help the our resources to focus on the Core work.

Reduce cost:

Labor and resources (hardware) costs are reduced and Operation cost for these are reduced significantly

High Efficiency

The outsourced Vendor will bring a new experience and increase the employed productivity and increase the efficiency.


With the well-defined contract created there is clear responsibility and accountability on the service provided.

Risk Reduction

Organization drastically transfer the risks to3rd party by outsourcing and keep a eye over the monitoring.

Business scalability

With business demands we can increase the number of resources (human/hardware) and reduce based on the business in a shorter duration.


High Transaction cost

The cost towards regular supervision and checks are high

CIA Issues

Privacy and confidentiality are high in outsourcing as we don’t have a control over these

Lack of control

Control over the managing things is purely with outsource organization

High Security Risk

There is high potential risks over security space since the information is fully with 3rd party

Employee Morale

Current organization Morale could be impacted on the nature of the job being outsource

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