Information Technology Outsourcing: Reducing Costs or Knowledge?

Businesses have been outsourcing Information Technology (IT) activities since the early 1950s. However, outsourcing has grown tremendously since Kodak outsourced its IT in 1989. Early outsourcing arrangements were motivated primarily by operational cost saving, but more recently, the motivation for outsourcing has shifted to strategic business performance improvement. An increasing range of IT functions are being outsourced, including applications programming, telecommunication management, systems integration and systems operations. Firms that earlier outsourced only small part of IT functions are now outsourcing their entire IT department. This phenomenon of outsourcing is not just limited to IT.