The Outsourcing Equation: Is IT a Strategic Asset?

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Dr. Paul Leidig, leidig@gvsu.edu

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Nicholas Carr's May 2003 Harvard Business Review article "IT Doesn't Matter", stoked a debate on the idea that IT has become a commodity: That IT has evolved to the point where it can be viewed as a cost center to be controlled instead of an investment center to provide market leadership. If an element of IT proves to be a true cost center, and not a competitive advantage, then a logical approach is to find an outsourcer who specializes in that business and profit from economies of scale. The company can then save money through outsourcing and focus energy and invested capital on areas that are of strategic advantage. Determining which areas of IT to outsource then becomes critical. However, the decision to outsource may not be that simple. If an outsourcer can provide a company domain experience or resources that they do not readily have available, even strategic advantages may be candidates for outsourcing. After it is determined which elements of IT can and should be outsourced, then the remaining staff and projects are important to the company for some reason: Security, Market Leadership, Human Capital, etc. Those remaining areas are best left locally managed and are the areas of IT that are strategic assets.

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