Today, IT services for companies are becoming a day-to-day reality. More and more companies and startups are turning to third-party connoisseurs who work on an outsourcing management model. This solution allows you to grow your business in an unstable market without the risk and the need to expand the in-house staff. It only remains to understand the pros and cons of IT outsourcing. You can discover the answer to this question and other thematic information at Intellisoft.
Let’s imagine you have successfully launched your own business. Now you are thinking about how to take off some of the burden and transfer, for example, IT tasks to outsourcing companies. In this case, you, like no one else, are interested in the most likely prospects and possible risks of such a decision.
Benefits of Outsourcing IT
Many of today’s enterprises have already appreciated outsourcing IT pros and cons and are successfully using it to develop their business. Transferring a company to outsourcing means entrusting the solution of certain tasks to a third-party organization (contractor). Such a solution will ensure maximum functionality and performance of the company’s IT infrastructure.
First of all, IT outsourcing allows you to reduce the cost of maintaining staff and significantly improve the quality of the IT infrastructure. But these are far from all points of are advantages of outsourcing.
#1 Increase in Competitiveness and Efficiency
Do not believe the stereotype that outsourcing IT is cheap, which means it is fraught with poor quality of services. On the contrary, it opens up access to valuable personnel and high technologies and, at the same time, frees the hands of the office staff. This is because most outsourcers have solid practice, which positively affects the quality of the result. They have a unique reporting system, thanks to which the client can control the process at all stages, which is an additional disciplinary factor.
Ultimately, outsourcing to a trusted agency should give you the confidence that tasks are done professionally and efficiently without worrying about workflow.
#2 Significant Savings
One of the main advantages of outsourcing is the ability to save money without compromising the quality of IT services. Outsourcing IT makes a subscription service contract much cheaper than the maintenance of a full-time employee. And it does not require you to bear such overhead costs as:
Social package for employees.
Office rental for work.
Providing the equipment.
The cost of finding and training specialists.
And also insurance, possible fees, and other needed costs associated with regular staff. The one-stop-shop format for technical issues allows purchasing the most suitable hardware and software at affordable prices.
#3 Pool of Talents
While outsourcing IT is economical, this is not the main advantage of this approach. Among other things, it gives access to talented personnel around the world. Moreover, you get more opportunities to find a competent specialist whose services will cost you much more profitable.
After all, finding an experienced developer from Eastern Europe who will perform high-quality work at half the price of a specialist from your region is much more profitable. By the way, last year, the top outsourcing destinations for finding IT talent included countries such as:
Each owner of a startup or company chooses an outsourcing direction that best suits their criteria and needs.
#4 Risks Share
The outsourcer company works on tasks controlled by both the customer and the executing company (this is also prescribed in the contract). Therefore, such charges have deadlines, an action plan, and an expected result and won’t be lost. In addition, the contractor always strives to minimize labor costs for the client’s planned tasks. The outsourcing company uses this monitoring system or automated backup systems with notification of successful or unsuccessful backups.
Outsourcing IT also ensures the company against the risks of disconnecting services and reduces costs and efforts to:
computer subscription service
At the same time, the company can concentrate its efforts and resources on business tasks because it has delegated all the core work to the contractor.
Risks of Outsourcing IT
Some say that IT outsourcing has risks. This practice also has its drawbacks because nothing is perfect. These are, instead, not risks but nuances (after all, you sign a contract with a contractor, which means you minimize them). So, what do you need to keep in mind when outsourcing some of your tasks?
#1 The Question of Trust, Security, and Intellectual Property
Company leaders can quickly lose business control if sensitive information gets to third parties, such as competitors.
On the other hand, such cases are most often associated with non-fulfillment of obligations by the customer company: payment evasion, suspension of project financing, etc. Moreover, information leakage is not always the fault of the contractor. How to minimize this risk:
First, choose an outsourcing company with a good reputation and reviews.
Sign with NDA contractor.
Implement protection and regular monitoring systems.
Signing with an NDA contractor involves using a meticulously crafted NDA template, which outlines the specific terms and conditions governing the protection of your sensitive information. This legally binding agreement deters information leaks and provides a clear framework for addressing breaches, reinforcing your control over vital business data. Also, security and informing strategies will help you in case of unauthorized access.
#2 Managerial Flexibility Can Decrease
As a rule, outsourcing IT assumes that all management is concentrated in the hands of one person. And if, at the same time, there are such problems as a waste of resources or an inability to plan and control the work of technical specialists. This can lead the company to postpone the deadlines for delivering essential projects and lose money. To reduce this risk:
Make a complete list of objects the contractor will control and support, from equipment to business processes.
Establish requirements and norms and identify criteria for monitoring.
Fix this contract and coordinate it with full-time specialists who have reliable information about the IT infrastructure in the company.
And again, write everything down in the contract.
#3 Difficulty of Working Time and Rhythm Sync
Different time zones interfere with synchronous collaboration on projects. There is no way for the CIO to meet with staff in person, so they have to communicate via email and collaboration tools. The problem lies in non-synchronous communication and possible issues with the delivery of the code or service (again, due to desynchronization).
How to minimize risk: The company should have a well-thought-out plan for project management and communication with the outsourcer. If you resolve this issue, you can sleep peacefully, knowing that your business works around the clock.
#4 Low-Quality End Product
The quality of IT services can be higher or lower depending on what is being outsourced. Customers often turn to the services of an IT outsourcer when they lack qualified specialists or to save on rough work. So, on the one hand, the company receives quality service at an affordable price. But on the other hand, it faces such problems as:
Gaps in knowledge.
Unwillingness to quickly resolve complex situations.
Irresponsible approach to the performance of duties.
And this can cause irreparable harm to the business. But on the other hand, the customer gets what he paid for if he wants to save money. How to minimize this risk: Again, look for contractors who already have a reputation and portfolio and are aware of performance standards and contracts. Negotiate the price and carefully write down all the nuances and requirements in the contract.
IT Outsourcing: Not Always Cheap, but Always Profitable?
It is impossible to say whether outsourcing contributes to cost savings for the customer: it all depends on the specific situation. If the business is very dynamic, it will be difficult for you to maintain your own IT service, which must be flexible enough to respond quickly to business requirements. By the way, the IT service is dozens of highly paid specialists in:
corporate systems for the customer.
This would cost more than attracting external service providers. Customers primarily benefit from outsourcing, not from cost savings. Still, external management and outsourcing are given more functions since they free up resources for core activities.
Who Needs the IT Outsourcer Services?
Business process outsourcing is a modern, effective tool that allows the customer to transfer non-core functions to a third-party organization, focusing on the critical tasks of the company. Therefore, it will be helpful for different categories of companies and businesses, namely:
Stable organizations with good incomes. This will be optimal for companies looking for opportunities to provide quality IT services to the global market.
Companies in the growth phase. This is the case when you want to expand and do not see the point in hiring a specialist in the staff.
Startups. Outsourcing will help a startup launch a project while reducing the cost of specialists.
It is better to hire a full-time programmer if you need an IT specialist permanently and not on a case-by-case basis. Take your business to new heights by outsourcing Java development. Experience a boost in productivity and efficiency while saving costs.
3 Myths About IT Outsourcing
Considering all the pros and cons of IT outsourcing, people tend to believe some stereotypes and myths about this practice. Consider the main restrictions that startups come up with for themselves:
Dependence on the outsourcing company. You can find at any time another performer for your work;
Data leak. We have already mentioned this risk, but we emphasize that this is rather a myth. After all, after the contract, the responsibility for distributing your data to third parties will be indicated;
High costs. Many people think a freelancer can charge too much for their services. But in fact, the assistance of an outsourcing specialist will cost much less than maintaining an additional workplace.
Therefore, if you want to delegate your projects and expect a high-quality result, do not hesitate to outsource IT.
Latest IT Outsourcing Trends
IT outsourcing also does not stand still, and the approach to collaboration is constantly changing and improving, demonstrating new IT outsourcing trends:
Value instead of saving on service. Now, cooperation focuses not on low prices but on excellent services.
Multiple providers. This will provide project flexibility and expand networking for further partnerships.
New directions of outsourcing. Eastern Europe attracts special attention due to highly qualified personnel.
New business standards. Contracts will have unique requirements and formats, guaranteeing partners different results and a constructive approach to cooperation.
Automation. Involving AI, automating processes, and improving software will make IT tasks more professional.
Cloud platforms. Information security will also go through some changes.
There is also an active trend for contracting. According to GSA UK, almost 90% of respondents are sure that all participants in IT outsourcing cooperation will sign contracts.
What Can Help Reduce Risks in Outsourcing IT Collaboration
When choosing an outsourcing company, check outsourcing IT pros and cons in this company. Pay special attention to factors such as:
Services for compliance with international ITSM and COBIT standards.
Also, pay attention to the conditions for providing services remotely and directly at the facility.
IT outsourcing has successfully established itself in America and Europe, and now it is increasingly experienced in Ukraine. In contrast to managing a remote unit in the outsourcing process, working in the office with your team is more familiar and more straightforward, but this is only at first glance. Among the leading outsourcing IT pros and cons, we can distinguish such advantages as:
Improved team competence and efficiency.
Access to high technology and talent pool.
Among the minuses and disadvantages can be identified such points as:
The threat of data leakage.
The difference in time zones.
Possible loss in quality.
Problems in management.
However, these shortcomings can be easily minimized if you choose your company carefully. If you consider it carefully, you will notice that all potential risks are somehow connected with the short-sightedness of the customer or the contractor’s dishonesty. The real success of outsourcing is when both parties are satisfied with the cooperation, clear interaction, and mutual trust.