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Outsourcing - Pros and Cons
In the long term, blind offshoring will not only hurt companies through inefficiency but will also jeopardize their intellectual property. Culture, local laws and lack of visibility impose significant challenges in protecting intellectual property when offshoring. For example knowledge cannot be shielded, and virtue exists in sharing it.(Heidari, 2005).
Lack of control. Problems can also arise as a result of you not being able to control the firm especially in case where the outsourcing is that of offshoring.
Loss of control, declining rate of innovation, low performance, high transaction costs, other hidden cost including loss of key IT employees and dissipation of competitively relevant knowledge, including loss of absorptive capacity to monitor technological advance as well as motivation loss of remaining employees are all risk associated with IT outsourcing.
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