"The Real Savings from IT Outsourcing," MIT Sloan Management Review


Published: 21Feb2014

Authors: Han, Kunsoo; Mithas, Sunil

Publication: MIT Sloan Management Review


These days, it is rare for a business not to outsource some part of its information technology function. For many companies, reducing operating costs is a key goal of IT outsourcing, but not all companies realize such savings. One reason managers may not realize the expected gains from IT outsourcing is that they narrowly focus on only their IT costs. However, our research suggests that outsourcing IT can also help to reduce other expenses such as sales and general and administrative costs, which are often four to five times IT costs.