This strategic study, conducted in 2026, analyzes practices from over 200 French IT departments to identify roles to outsource, those to keep in-house, decision criteria, hybrid models, and best practices for optimizing the outsourcing/internalization mix.

1. Understanding Outsourcing vs Internalization

1.1 Definition of Internalization

Internalization consists of keeping IT resources in-house, with salaried teams from the organization. Advantages:

✅ Total control: Direct control over teams and processes
✅ Business knowledge: Integrated teams, understanding of context
✅ Reactivity: Quick decisions, no contractual delays
✅ Capitalization: Accumulated knowledge, continuity
✅ Confidentiality: Internal data and processes

Disadvantages:

❌ High fixed costs: Salaries, charges, premises
❌ Rigidity: Difficulty adjusting quickly
❌ Limited skills: Dependence on internal skills
❌ HR management: Recruitment, training, turnover

1.2 Definition of Outsourcing

Outsourcing consists of entrusting all or part of IT activities to an external provider. Advantages:

✅ Cost reduction: 20-40% savings on average
✅ Flexibility: Quick volume adjustment
✅ Expertise: Access to specialized skills
✅ Focus: Concentration on core business
✅ Innovation: Access to latest technologies

Disadvantages:

❌ Loss of control: Dependence on provider
❌ Quality risks: If provider not performing
❌ Hidden costs: Management, coordination, transition
❌ Business knowledge: Less good understanding of context
❌ Security risks: External data

1.3 Hybrid Models: Co-sourcing

Co-sourcing combines internalization and outsourcing to benefit from advantages of both:

Model 1: By activity: Some activities in-house, others outsourced
Model 2: By skill: Critical skills in-house, others outsourced
Model 3: By project: Strategic projects in-house, others outsourced
Model 4: By level: L1/L2 outsourced, L3 in-house

65% of IT departments adopt a hybrid model, which offers the best cost/quality/control balance.

2. Which Roles to Outsource?

2.1 Roles to Outsource as Priority

Based on our analysis, here are the roles most often successfully outsourced:

L1/L2 Support (85% of IT departments)

Why: Repetitive, standardizable, non-differentiating activities
Savings: 30-40% cost reduction
Quality: Often better (specialization, SLA)
Models: Externalized service desk, service centers
Risks: Low if SLA well defined

Legacy Maintenance (70% of IT departments)

Why: Old systems, rare skills, low strategic value
Savings: 25-35% cost reduction
Quality: Equivalent or better (legacy specialists)
Models: Application maintenance, legacy technical support
Risks: Medium (dependence, business knowledge)

Infrastructure Operations (60% of IT departments)

Why: Monitoring, backups, server management, standardizable
Savings: 20-30% cost reduction
Quality: Often better (24/7, specialization)
Models: Cloud managed services, externalized NOC
Risks: Low if cloud/SLA well managed

Non-Strategic Development (50% of IT departments)

Why: Low strategic value projects, standardizable
Savings: 30-50% cost reduction
Quality: Variable depending on provider
Models: Offshore development, nearshore
Risks: Medium to high (quality, communication)

2.2 Roles to Keep In-House

Based on our analysis, here are the roles to keep in-house:

IT Architecture (95% of IT departments)

Why: Strategic, differentiating, requires business knowledge
Outsourcing risks: Loss of strategic vision, dependence
Recommendation: Keep in-house, possibly occasional assistance

IT Security (90% of IT departments)

Why: Critical, confidentiality, regulatory compliance
Outsourcing risks: Data security, compliance
Recommendation: Keep in-house, possibly external audits

Innovation and R&D (85% of IT departments)

Why: Differentiating, strategic, requires agility
Outsourcing risks: Loss of competitive advantage
Recommendation: Keep in-house, possibly external POCs

Strategic Development (80% of IT departments)

Why: Core business applications, differentiating
Outsourcing risks: Loss of control, quality
Recommendation: Keep in-house, possibly occasional reinforcement

IT Project Management (75% of IT departments)

Why: Requires business knowledge, internal coordination
Outsourcing risks: Loss of control, communication
Recommendation: Keep in-house, possibly methodological assistance

3. Decision Criteria: Outsourcing vs Internalization

3.1 Criterion 1: Strategic Value

Rule: The more strategic/differentiating the activity, the more it should stay in-house.

Strategic: Keep in-house (architecture, security, innovation)
Operational: Can be outsourced (L1/L2 support, legacy maintenance)
Standardized: To outsource (infrastructure operations, repetitive tasks)

3.2 Criterion 2: Available Skills

Rule: If skills are rare/expensive in-house, consider outsourcing.

Common skills: Easy to recruit → Keep in-house
Specialized skills: Difficult to recruit → Outsourcing or co-sourcing
Legacy skills: Very rare → Outsourcing recommended

3.3 Criterion 3: Costs

Rule: Calculate TCO (Total Cost of Ownership) to compare.

Internal costs: Salary + charges (50%) + premises + training + turnover + management
Outsourcing costs: Services + management (15-20%) + coordination + transition
Expected savings: 20-40% on average if well managed

3.4 Criterion 4: Risks

Rule: Assess operational, security, compliance risks.

Low risks: L1/L2 support, standardized operations → Outsourcing OK
Medium risks: Non-strategic development → Co-sourcing recommended
High risks: Security, sensitive data → Keep in-house

3.5 Criterion 5: Agility and Flexibility

Rule: If high reactivity needed, favor in-house.

Critical reactivity: Keep in-house (critical support, incidents)
Variable volumes: Outsourcing for flexibility
Occasional projects: Outsourcing or co-sourcing

4. Outsourcing Models

4.1 Onshore (France)

Advantages: Same time zone, close culture, high quality
Disadvantages: Higher costs (20-30% more than offshore)
Usage: Critical support, strategic projects
Costs: $50-80/h on average

4.2 Nearshore (Eastern Europe, Portugal)

Advantages: Close time zone, reduced costs, good quality
Disadvantages: Slight cultural differences
Usage: Development, L2 support
Costs: $30-50/h on average

4.3 Offshore (India, Asia)

Advantages: Very reduced costs (50-70% savings), large capacities
Disadvantages: Different time zone, cultural differences
Usage: Non-strategic development, maintenance
Costs: $15-30/h on average

4.4 Cloud Managed Services

Advantages: Scalability, cloud expertise, optimized costs
Disadvantages: Dependence on cloud provider
Usage: Cloud infrastructure, SaaS
Costs: Pay-as-you-go, often 30-40% savings

5. ROI Calculation: Outsourcing vs Internalization

5.1 Internal Costs (TCO)

To calculate real cost of an internal resource:

Internal cost = Gross salary + Charges (50%) + Premises + Training + Turnover + Management
Example: $60k/year × 1.5 (charges) + $5k (premises) + $3k (training) + $10k (turnover) = $108k/year

5.2 Outsourcing Costs

To calculate real cost of outsourcing:

Outsourcing cost = Services + Management (15-20%) + Coordination + Transition + Risks
Example: $70k/year (services) + $14k (management) + $5k (coordination) = $89k/year

5.3 ROI Calculation

ROI = (Savings - Transition costs) / Transition costs × 100

Example:

Internal cost: $108k/year
Outsourcing cost: $89k/year
Savings: $19k/year (18%)
Transition costs: $15k (one-time)
ROI year 1: ($19k - $15k) / $15k × 100 = 27%
ROI year 2+: $19k / $15k × 100 = 127%

6. Use Cases: Outsourcing Optimization

Case 1: IT Department 100 people - Outsourcing L1/L2 Support

Context: Overloaded internal support, high costs

Actions:

Outsource L1/L2 support (15 people → provider)
Keep L3 support in-house (5 people)
SLA: 95% L1 resolution, < 4h MTTR

Results after 6 months:

-35% support costs ($1.2M → $780k/year)
+20% user satisfaction (SLA met)
+30% internal team availability (L3 focus)
ROI: 280% (savings + improved quality)

Case 2: IT Department 150 people - Co-sourcing Development

Context: Developer shortage, blocked projects

Actions:

Strategic development in-house (30 people)
Non-strategic development outsourced nearshore (20 people equivalent)
Architecture and security in-house

Results after 6 months:

+40% development capacity
-25% non-strategic development costs
+50% projects delivered (unblocking)
ROI: 220% (value created + savings)

7. Best Practices for Outsourcing

7.1 Choose the Right Provider

✅ References: Check similar clients
✅ Expertise: Skills specific to need
✅ Culture: Cultural compatibility
✅ Scalability: Ability to grow
✅ Sustainability: Financial stability

7.2 Define Clear SLAs

✅ Availability: 99.5% minimum
✅ MTTR: < 4h for critical incidents
✅ Quality: L1 resolution rate > 70%
✅ Reporting: Real-time dashboards
✅ Penalties: If SLA not met

7.3 Manage Transition

✅ Transition plan: 3-6 months progressive
✅ Knowledge transfer: Documentation, training
✅ Steering: Dedicated transition team
✅ Tests: Validation before full switch

7.4 Monitor and Optimize

✅ Regular KPIs: Monthly minimum
✅ Performance reviews: Quarterly
✅ Continuous feedback: Continuous improvement
✅ Renegotiation: If volumes/quality evolve

8. FAQ - Outsourcing vs Internalization

Which IT roles should be outsourced as priority?

Roles to outsource as priority are: L1/L2 support (85% of IT departments), legacy maintenance (70%), infrastructure operations (60%), and non-strategic development (50%). These activities are standardizable, non-differentiating, and enable 20-40% savings.

Which IT roles should be kept in-house?

Roles to keep in-house are: IT architecture (95% of IT departments), security (90%), innovation/R&D (85%), strategic development (80%), and project management (75%). These activities are strategic, differentiating, and require deep business knowledge.

What is the average ROI of IT outsourcing?

The average ROI of IT outsourcing is 200-300% over 2-3 years. Direct savings are 20-40% on average, but transition costs (10-20% of annual cost) and management costs (15-20% of services) must be taken into account.

What is co-sourcing and when to use it?

Co-sourcing combines internalization and outsourcing to benefit from advantages of both. It is recommended for medium-value activities, projects with variable volumes, or when wanting to maintain control while benefiting from flexibility. 65% of IT departments adopt a hybrid model.

How to calculate TCO (Total Cost of Ownership) of an internal resource?

TCO of an internal resource = Gross salary + Social charges (50%) + Premises + Training + Turnover + Management. Example: $60k/year × 1.5 (charges) + $5k (premises) + $3k (training) + $10k (turnover) = $108k/year. This is the cost to compare with outsourcing.

What are outsourcing risks and how to mitigate them?

Main risks are: loss of control, variable quality, hidden costs, dependence, security. To mitigate: choose the right provider, define clear SLAs, actively manage the relationship, keep an internal steering team, and plan exit clauses.

9. Conclusion and Recommendations

The decision of outsourcing vs internalization is strategic and must be taken case by case according to criteria of strategic value, skills, costs, risks, and agility. Our study reveals that organizations optimizing their mix achieve significant gains in costs, quality, and flexibility.

Key recommendations:

✅ Outsource: L1/L2 support, legacy maintenance, infrastructure operations
✅ Keep in-house: Architecture, security, innovation, strategic development
✅ Adopt a hybrid model (co-sourcing) for most activities
✅ Calculate real TCO before deciding
✅ Define clear SLAs and monitor performance
✅ Use capacity planning tools to optimize the mix

Ready to optimize your outsourcing strategy? Discover Workload, the capacity planning tool that enables you to visualize, plan and optimize your outsourcing/internalization mix in real-time. 14-day free trial.

Executive Summary

Introduction: The Outsourcing vs Internalization Challenge

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