Industrial and Management Project on IT Outsourcing Analytic Hierarchy Process

Introduction to Industrial and Management Project on IT Outsourcing Analytic Hierarchy Process:

This paper discussed about how to make Information Technology Outsourcing decision based on the Analytic Hierarchy Process. The developed two hierarchies are one for making a choice to outsource activities and the other to choose suitable outsourcing technique. 

The Decision making model: 

In the decision hierarchy, at first level, focus is there on an activity outsource. At second level, focus is there on criticality, stability and simplicity. At third level, a company may show any number of activities to choose from outsource as per requirement. The aspects of any activity are compared pair wise. The decision makers are responsible to answer question like how to develop current business position and what is the IT department’s strength. These two answers will helpful to decide whether outsourcing is required or not.  

In the decision hierarchy, at fourth level deciding the outsourcing methodology takes place.  Any activity will outsourced through several alternative contracts.  The contracts classified into four categories namely Insourcing, Value-added outsourcing, Short-term outsourcing and long-term outsourcing. Based on the advantages and disadvantages of a contract, company will decide that contract belongs to which category among the available 4 categories. Expert Choice or any other AHP software is used for responses analyzing. As the methodology for outsourcing, an alternative with the highest priority will get selected. 

An initial step in deciding the outsourcing methodology is to decide the business priorities. The overall focus has been fixed and this fixed focus ensures there is no loss in model generality.  In order to achieve the goal, the company has flexibility in deciding the criteria.  Decision makers assign values to the options available in the next level based on the goal’s view. IT Outsourcing helps to solve the current business problems, to improve the business and to transform\change the business. 


This paper proposed a decision making model ITO by using the Analytic Hierarchy Process (AHP).  The model developed was tested against an outsourcing decision made at India’s leading automobile company.  While taking decisions market trends need to consider.

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