IT Outsourcing Or In-House IT Services

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There is a direct link between business strategy and the use of IT outsourcing or in-house IT services; there are theories that can support their relationship. Alternative options that are associated in IT outsourcing or in-house IT functions can generally support business strategies that are oriented toward cost-efficiency, business competitiveness, product / service innovation, flexibility of resources, system management and collaborative partnerships. There are patterns that can be attributed to certain business strategies that are linked with certain requirements of IT outsourcing services, in-house IT functions and the types of organizations that can most likely accommodate them.
According to Miles and Snow, there are four levels
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26). Organizations that use prospector strategy are characterized as adventurous, innovative, optimistic, creative and adaptive. Flexibility is one major concern of the business. For prospectors, IT insourcing or in-house IT functions offer beneficial services in simplifying management of resources. In-house IT functions can also promote responsiveness to changing trends and environmental uncertainties. For such businesses, “creativity” is preferable than “efficiency” (Miles & Snow, cited in Barnat, 2014). They aim to penetrate more markets and take advantage of different opportunities (Hirschheim, et al., 2009, p. …show more content…
It can be linked to the use of selective IT outsourcing (Monash University, 2015, p. 26). Organizations that implement the analyzer strategy can prefer selective IT outsourcing in meeting their relative requirements and business goals. As applicable for this type of business, IT outsourcing services are procured in managing stable lines of products. However, for newly-launched and unstable lines of products, in-house or insourcing of IT system is most likely acquired. With selective outsourcing, these businesses can achieve efficiency in their existing resources, while attaining innovation for their new product lines. With selective outsourcing, more options and alternatives can meet desired targets and control systems of the company (Miles & Snow, cited in Barnat, 2014). Moreover, analyzers can have both attributes of prospector and defender strategies that are implemented in moderate levels. These attributes enable analyzers to deal with conflicting domains of their products and operations efficiently and strategically (Hirschheim, et al., 2009, p. 220). For the analyzer business strategy and the use of selective IT outsourcing, the theory of transaction cost economics can apply. Under this context, the use of IT in-house operations is recommendable for high degrees of product customization based on lower IT production costs and business expertise of internal staff. On the other hand, for stable

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