Outsourcing is commonplace for IT needs.
Bill Gates famously stated, that "an important re-engineering principle is that companies should focus on their core competencies and outsource everything else". The idea of outsourcing is that if it isn't your core competency, then someone else can probably do it for you more efficiently and for less cost.
Outsourcing has become especially common in the information technology (IT) sector, with many companies simply choosing to have their IT needs taken care of by outside companies. The reason that it is particularly common in the IT field is simply that IT is a highly specialized area, and while most companies have IT needs, few have the resources to handle those needs. There are essentially three outsourcing strategies in IT, off-shoring, near-shoring, and insourcing. The right choice for your company will depend on your specific needs.
Off-shoring
Off-shoring is the strategy of outsourcing your IT needs to a distant location. This is a common choice for businesses that are primarily interested in the lowest cost option. India has become the go to destination for cheap IT outsourcing, due to their highly educated population and low wages. The downside to off-shoring is that it can be difficult to have a strong relationship with a distant organization and there can be problems with service when it is being delivered from a distance. In particular, it can be difficult to get a hold of your IT firm if you have an IT emergency such as a database crash.
Near-shoring
Near-shoring is the strategy of outsourcing your IT needs to a domestic, regional or even local provider. Near-shoring is considerably more expensive than off-shoring because of higher wages, but it will allow you to obtain a higher level of service than you could provide internally. The advantage of near-shoring is that it is easier to work directly with a company that is geographically close to you. In the event of an IT emergency it is usually easy to track down someone to help you. Near-shoring is a good strategy for a company that is more concerned about service than price when it comes to IT.
Insourcing
Sometimes a company may want to outsource their IT needs, because they cannot provide the internally, but they are reluctant to do so because they do not want to share their information with the rest of the industry. An airline, for instance, may not have the staff to implement their IT system, but they do not want to outsource this as the information could end up in the hands of competitors. The answer, then, is to insource. Insourcing involves bringing in a team of IT experts from outside and having them act like an external organization, while retaining them on a full time basis.
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