The boom in information technology coupled with expanding internet solutions, especially in the fast advancing countries like China and India, opened up avenues for outsourcing at much lower wages. While it has facilitated recovering losses incurred during the recession, the wider ramifications of outsourcing of IT services have also become a huge concern for public and private companies.In the era of fast-paced technological advancement and rapid globalization, business dynamics are also undergoing dramatic transformations. Labor deployment is undergoing huge quantitative and qualitative transformations. While on the one hand, outsourcing agencies have provided employment opportunities, the outsourced organizations have also become responsible for the increasing unemployment. The highly pertinent issue of data security and security of official information are critical factors and are important security risks that need to be protected from becoming public knowledge.The purpose of the study is to gauge the extent of the influence of outsourcing of the IT services for private and public institutions. The study is designed to evaluate the current business activities and HR strategy and identify the non-core activities that could be efficiently and effectively managed virtually through outsourcing. The study would also help to evaluate the risk involved in the outsourcing of IT services.According to P.F.Drucker, ‘access to information represents the basic precondition for the success of a firm’ (Drucker, 1998). Access to information is a vital part of organizational management processes as it not only promotes efficiency and knowledge-based discharge of duties by the employees but it a great tool for the management to exploit the available information to improve its performance. Indeed, the emerging business paradigms have made it imperative for organizations to outsource their routine work.