The cost savings from outsourcing IT can be found in many areas of a company’s operation, not just IT itself.

Information technology outsourcing can generate significant savings for companies in not just the expected ways — like reducing IT operating costs — but in non-IT areas of the business as well.

It’s an opportunity that many companies miss. “When managers think of IT outsourcing as a mere substitute for internal IT investments, this narrow focus hides many potential cost benefits,” write Kunsoo Han and Sunil Mithas in their article “The Real Savings From IT Outsourcing,” in the Winter 2014 issue of MIT Sloan Management Review.

Instead, managers need to look for savings more broadly. “Our research suggests that outsourcing IT can also help to reduce other expenses such as sales and general and administrative costs, which are often four to five times IT costs,” say Han and Mithas. [Details on their research can be found in their article “Information Technology Outsourcing and Non-IT Operating Costs: An Empirical Investigation,” in MIS Quarterly 37, no. 1 (March 2013): 315-331.]

Their findings, they write, “can assist managers in formulating strategies and allocating budgets.” Their recommendations:

1. “Managers need to take a balanced approach to their investments in internal systems and outsourcing to reap greater benefits in terms of cost savings: Merely substituting IT outsourcing for internal IT will not be very effective.”

2. Managers “should analyze the impact of outsourcing on non-IT costs and formulate strategies for maximizing the savings on these expenses to get the most out of their outsourcing spending.”

3. Remember that “benchmarking with respect to competitors on IT budgets alone may be counterproductive.” Excessive focus on IT cost reduction may overlook considerably larger savings in marketing, sales and R&D.

4. “Companies should continue to make investments in their own IT professionals and help them improve their skills through continued education, training and accumulation of relevant industry experience.”

The data Han and Mithas used for their study is not particularly current — it’s from approximately 300 U.S. companies during 1999–2003. But, they write, “we expect these findings to remain relevant, as many companies are currently considering more intensive adoption of outsourcing, offshoring or cloud computing.”