In the minds of most people IT Outsourcing usually would imply job cuts in the company that outsources its IT functions. A recent study by the European Economy Research Centre (Zentrum für Europäische Wirtschaftsforschung GmbH) in Germany disputes this assumption. The German economist Jorg Ohnemus has collected and analyzed data from 1100 companies and has concluded that IT outsourcing leads to the creation of more jobs in the companies that choose to outsource.
According to him IT outsourcing is a strategic decision that not only allows the companies to cut costs. By eliminating the activities and processes that are not related to the core business of a given company, its directors free their capacity to develop other core activities, more important for the company’s main area of business. This leads to a stronger business performance and a greater market share for the company. In order to sustain those results the directors hire new staff.
The study findings are based on two research projects conducted by the European Economy Research Centre in Manheim, Germany between 2004 and 2007. 39% of the 1100 companies in the study outsource their IT functions. Those companies reported jobs in their organizations increased by 6%.
The study concluded that outsourcing of the IT functions in fact created short term and long term growth opportunities for the companies and created rather than cut jobs.
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