Second Alternative Adidas Case Essay

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 worrying on maintaining competition between vendors or a loss in quality from the service provided from any of the vendors.
Having an in-house IT department will give them the control of hiring who they think is the best for the job, train people to meet their current needs and also employees will do a better job because they will feel part of the company and not doing the job for someone else. This three elements lead to the next benefit of Adidas switching to in-house which is control and keep a better quality.
Every time Adidas outsources an IT project to any of the vendors, they have very limited control in the quality of the work that the vendor is doing. It is true that by having multiple vendors, the vendors will try to do the best work possible in order to prevent one of the other vendors from winning the next bid due to lack of quality. But as competition gets tougher and vendors start reducing their prices, there is going to be a time where they feel that they are not making enough money in the project so they will lower the quality of the work. Perhaps this is a problem that can be solved by replacing the vendor with a new one, but the cost of a vendor not doing the job right could be very severe. Also the people working on the project might not care about the end result of the project because for them it is just one more project and then they move on to another project for another company. They might not feel like they are part of Adidas therefore they might not give 100 percent of their work. If Adidas decides to do their global IT projects in-house, they can hire the best personnel, they can train their own people on how they

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