Does off-shoring IT make good business sense? Proceed with caution!

Abstract

IT off-shoring has received much attention in the media for both positive and negative reasons. However, there has been a lack of empirical studies that have critically evaluated the practice of IT off-shoring. This paper reports on a qualitative study of the key factors facilitating and inhibiting the adoption of IT off-shoring by Australian industry. Empirical data was collected in a series of in-depth interviews drawing on the first hand experience of a number of senior business managers and senior IT executives. The findings indicate that organisations are generally positively disposed towards the practice of IT off-shoring but are quite selective in what IT they are offshoring. The findings also revealed that the perceived cost advantages may actually be much lower than expected due to the considerable establishment and management costs associated with IT off-shoring. Furthermore organisations need to also consider the negative consequences such as the potential loss of IP and loss of valuable internal ICT knowledge and capability.