The concept of IT outsourcing has gained momentum, and lately, many businesses have joined the bandwagon.
According to research, the global outsourcing services sector is expected to hit around $904.9 billion by 2027. This translates to a lot of companies that transfer their IT duties to experts.
Businesses can choose to outsource an entire project, such as developing a mobile app or simply a few tasks, depending on the needs and intricacy of the project.
According to Statista, outsourcing IT services is super popular. The global software outsourcing market alone was worth $92.5 billion.
Running an in-house team for IT can be time-consuming, so it’s no wonder that many businesses opt for outsourcing IT instead.
In fact, 92% of G2000 companies are using IT outsourcing.
There are upsides and downsides to outsourcing IT but usually, the benefits outweigh the disadvantages. You get expert help and can focus on your core competence—keeping your customers happy. Although change sometimes looks scary, this might be one of the smartest moves you will make this year—outsourcing your IT.
What is IT outsourcing?
According to Gartner, this refers to the process of contracting an external company to perform your IT tasks. This can cover everything from business processes and application services to infrastructure solutions.
Outsourcing also includes things like utility services, software as a service (SaaS), and cloud solutions. It helps businesses figure out the best strategies for sourcing IT, choose the right service providers, set up good contracts, and manage relationships with external vendors for long-term success.
To put it simply, this means getting someone else to do your IT rather than handling everything yourself inside your own company.
Why consider outsourcing?
If you’re unsure whether it’s time to look for outside help through managed IT services, here are some signs to watch for:
- It takes too long for projects to move, customer inquiries never get resolved and hours of downtime have become the norm.
- Frequent security problems that go unresolved lead to prolonged periods of downtime.
- These ongoing problems are eating up your company’s profits.
- You don’t have enough IT staff, so your experts are stuck handling minor problems instead of major ones.
- Customer support is not responding quickly or at all.
- Lack of a proper strategy to recover lost data
- You don’t have the money to invest in new cybersecurity measures, affecting your company’s performance.
- The process of hiring new employees takes too much time and money.
If these problems sound familiar, it might be a sign that your IT setup is struggling. Fortunately, IT outsourcing can offer solutions to these issues.
Pros of IT Outsourcing
Here are some of the obvious advantages you get when you outsource your IT department.
Saving money
There are many businesses that spend a lot on IT but they do not even know if they get what they need or pay too much for it. IT outsourcing puts you in charge of your IT expenses by helping you to manage them smartly. You pay only for what you use when you need it, and it is usually at a fixed monthly cost.
For instance, Deloitte discovered that companies can reduce their operational costs by up to 70% through outsourcing processes.
Another research found that 59% of companies outsource IT services primarily to reduce costs.
By outsourcing, you can employ skilled developers from countries where the hourly rates are much lower yet the work quality remains high.
For example, in the US, a software developer may cost $150 per hour, while one in Eastern Europe may cost only $50 per hour! Furthermore, there are also savings on such things as hardware, software, the recruiting process, sick leave salary, rent payments, utilities and office supplies, among others.
Access to Worldwide Talent Pools
The first advantage of IT outsourcing is that the company can get skilled specialists from all over the world. You cannot only employ staff from within your locality or the nation as a whole. For example, if you are an American organization that needs sophisticated data analytics capabilities, you can hire experts from Malaysia or the Philippines.
This means finding individuals with exceptional abilities, vast experience and impressive records of creating products that succeed is quite easy.
Improve Scalability
When your business is ready to grow, your IT should keep up, not slow you down.
Outsourcing IT lets you adapt and scale quickly. Whether you need to add new users, increase network performance, or deploy new features, it’s pretty easy to do. Managed IT support ensures expert assistance is only a call away.
By forgoing all of the in-house management obstacles, you’ll be able to adopt new technologies faster on average. Some functionalities, such as scan-to-email and automated backups, can make your business work better, increasing its productivity and therefore making it expand at a quicker rate.
Focus on the core business:
Outsourcing IT can give you a leg up over competitors, allowing you to concentrate on the essence of your industry without being weighed down by intricate technology concerns.
Your team is free to do what it’s good at while experts handle the complex stuff. Thus, rather than involving them in everyday technological issues, your staff has more time for business strategy and improving competitiveness.
“Do what you do best and outsource the rest.” Peter Drucker
This makes sense in today’s fast-moving tech world.
For instance, if you’re a law firm or in healthcare, IT support isn’t your specialty. Focusing on it requires extra effort to understand and manage the IT department, which can be hectic.
On the other hand, if you outsource, you can focus on your core business.
Prevent Downtime
For the smooth running of your business, having a reliable and secure IT infrastructure is crucial. The threats could range from natural disasters and cyberattacks to equipment failures. However, there are even smaller problems, such as the use of outdated software licenses or an unsecured network, that can be detrimental to your security and compliance.
To be prepared enough for any occurrence, it is advisable to consider IT outsourcing. Expert IT teams develop alternative plans and disaster recovery strategies meant to minimize downtime.
Moreover, these IT service providers are known to be experts in their respective fields and often invest in the latest tools, solutions, and training. This therefore implies that they are able to offer you excellent service, which will benefit your organization as well as its clients.
Security and Accountability
Safeguarding your company’s data is not easy by any means; it requires constant surveillance as well as continuous investment in preventing risks.
Outsourcing IT provides a specialized team with knowledge of how data security should be handled.
These professionals apply industry best practices in their handling of data, thereby ensuring its safety according to the provisions of the law. Furthermore, the duty of protecting this information rests on a third party, which is responsible for overseeing outsourced IT services, hence lightening your burden.
Cons of IT Outsourcing:
While IT outsourcing offers numerous benefits, there are several potential drawbacks to be aware of:
Lack of control
It may be uncomfortable for a business leader to delegate sizeable chunks of his infrastructure and processes to an outsourcing company. This loss of control could be unsettling and make one anxious.
Critics of IT outsourcing argue that outsourced providers are frequently not as responsive or service-oriented as an in-house team. The reason is that the vendor is not managed and controlled directly by an individual who also manages your internal staff members. While lack of control itself is not a peril, it can lead to challenges in case it’s not properly handled.
Misaligned Vision
One of the biggest risks is when you and the contractor don’t see eye to eye. This can occur due to poorly defined project objectives, among other things, such as communication breakdowns or simply lacking knowledge about each other’s industries.
Sometimes, differences in vision and goals can lead to disappointment if both parties aren’t on the same page about the project’s aim, timeline, and budget.
Hidden Costs
Many businesses end up spending more money than they expected when outsourcing IT. The unexpected cost in the long run could include such things as overhead, extra charges, and services that you didn’t plan for in your budget.
Alternatively, there may be additional outlays like product updates, shifting from one place to another, or the need for further support, which you assumed were part of the agreement.
Communication Barriers
Difficulties of communication can exist within one office itself, but they become even more complicated if remote teams work across several countries. Language differences and time zone issues can make it hard to get things done smoothly.
Places such as Poland, India or China, among others, where IT outsourcing rates are lower, usually have different languages and time zones, thus making communication quite challenging.
Insufficient domain knowledge
Another significant risk is when an outsourced team has no experience in your field. They might not be up-to-date with recent trends or developments, as well as the needs and demands of your audience.
Inadequate skills in this area will result in delays, extra expenses, missed deadlines and poor-quality work. Sometimes, the contractor might even give away your project to another, more professionally experienced company without informing you, which could jeopardize your data and creative control.