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Evaluation will be based on the following parameters:
1. Size of the organization
2. IT Maturity within the organization
3. Availability of cost effective local hire
4. Infrastructure
Assuming the IT function & services is currently in house - transition has to be a gradual process- first step would be to oursource generic tasks such as coding, non-functional testing, documentation, then move on to specialised functions involving design and problem statement definition & elaboration. Change Management is key here with strong senior management support.
For a new set up, starting with outsourcing IT services will definitely be the way to go-so that the company focuses on its core business and can leave the IT to specialists.