Adidas Outsourcing

Second Alternative: Keep everything in-house:

There are many benefits for adidas to outsource its IT department, it takes a weight of their shoulders and it lets the company concentrate in their core business. As we can see Adidas has spent a lot of time focusing on making the outsourcing successful not only for them but also for its vendors. They started with just one vendor and noticed that the quality of their service was not the best and prices were quite high for the work they were getting. They decided to introduce competition to increase quality and reduce prices. This strategy seemed to work in the short-term, but keeping this strategy in the long run is going to very challenging and time consuming.

This is why Adidas should consider in building a brand new IT facility and do all the IT in-house. Some of the benefits of an in-house IT department would be keep the profit margin that the vendors are making, control quality and reduce risk of proprietary information leaking to competitors.

Adidas has done a great job at promoting competition between its vendor to reduce prices, but not matter how much prices go down they are always going to pay a higher amount than what it actually costs to run the service. This is because the only way the vendors are going to be happy and keep doing business with Adidas is if they make enough profit to run the company and keep their stakeholders and owners happy. Vendors are always going to look after themselves before they look after Adidas. Once vendors see that they are not making enough profit from Adidas they will either leave, raise their prices or produce a less quality service.

Since Adidas’ main objective is to reduce the cost of IT services, if they develop their own IT department and do all the jobs in-house they will start saving the profit margin that the vendors are currently making by providing the service. This will be a great reduce in cost for the IT department and Adidas will not have to keep...