Executives pondering which parts of their information technology function should be outsourced and which should be kept in-house usually ask themselves, Does the particular IT operation provide a strategic advantage or is it a commodity that does not differentiate us from our competitors? If the operation is a core strategic service, they keep it in-house. If it is a commodity—especially one that a supplier claims to be able to provide for less money than the company’s IT department can—they outsource it.
A version of this article appeared in the May–June 1995 issue of Harvard Business Review.
