Create a 7 pages page paper that discusses is outsourcing information technology services an effective means of reducing a company’s overhead expenses. Dell had a unique business model and was the pioneer in selling computers through their website. They did manage to maintain direct customer contact and eliminate overhead through the elimination of intermediaries, through maintaining low inventory, low finished stocks, and outsourcing customer support and service. However, the reduced overheads can be eroded, as in the case of Dell, when they had to suffer a damaged reputation and cash expenditure to restore its position. This was despite their strategy to outsource only subassemblies and have control over the final test and assembly. There was a misalignment between the organizational goals and its long-term strategy. IT outsourcing must necessarily be aligned with business goals and have a long-term perspective.

Outsourcing of Information Technology (IT) services has been in practice by organizations for several reasons. Organizations typically delegate their non-core functions to outside service providers on the assumption that the external service provider delivers the service faster, better, and at a cost lower than what the enterprise can achieve by itself (Young, 2010). Business solutions are becoming customized and hence the service provider can employ standardized technology which results in lower costs. A manufacturer may perform the same business process at multiple locations but a service provider could perform the same process at a single location and deliver the service at multiple locations. By thus contracting out processes, the organization may achieve economies of scale, lower labor costs, enjoy more favorable payment terms, and have a better cash flow position.&nbsp.