Cost Of Outsourced It: All You Should Know

Devox Software Team
real cost of it outsourcing

The cost of it outsourcing is a very subjective indicator that depends on many factors. If, for example, your friend pays one price for such developments for his business, this does not mean that you will pay the same amount when ordering such services for your project. It is all because there are many indicators that determine the price.

  1. What Is Outsourced IT?
  2. What Effect On Cost Of Outsource IT Support?
  3. Cost Of IT Outsourcing Services On Average
  4. Cost And Value Of Managed Service Provider (MSP) Services
  5. Signs That You’re Overpaying For IT Outsourcing Services
  6. The Advantages Of A Fixed-fee Payment Approach For IT Services
  7. Outsourced IT Vs Co-Managed IT
  8. Pricing And Collaboration Strategies
  9. Outsourcing’s Extra Costs And Hidden Costs
  10. The Final Word

What Is Outsourced IT?

Let’s start with the fact that IT Outsourcing is the involvement of special companies to delegate certain powers. It is a partial or complete transfer to the outsourcing company of some functions that are related to the maintenance of equipment, software installation, consultations on the operation of software, and so on. And it is on the number of delegated functions that the cost of outsourced it depends.
Thus, Outsourced IT is the use of external sources to organize business processes and simplify the whole work of the company.

What Effect On Cost Of Outsource IT Support?

As mentioned above, outsourced it costs are a very subjective metric that depends on many factors. Namely:

Location of specialists

As a rule, it all depends on the countries where the specialists are located. Most often, countries that are positioned in the Western Hemisphere are more developed in many sectors, such as economy, technology, and so on, respectively, the price will be higher there. Each country has its specialists with their average prices. Therefore, geography decides a lot in the formation of outsourced it costs.
The highest bids for the price are, of course, in the United States, a little cheaper in Latin America, followed by Eastern Europe, and then South Asia.

Technology

There are two main types of information technology, namely traditional and advanced. Depending on what technologies the specialist will use, the price will depend.
Traditional technologies are distinguished by the fact that they are well mastered and used in many organizations. The latest technology is characterized by the fact that it is a new and modern approach that is used only in some organizations. It is the latest technologies that are cost-effective and successful.

Specialization and rank of the programmer

Experience and skills matter a lot. The more a person understands and knows something, the more valuable and necessary employee he or she is. Same here. If the developer is of a higher rank, the cost of it outsourcing will be higher accordingly.
There are three ranks in total. The first one is junior. As a rule, this is a beginner who has just embarked on the path of his development. The price of such a developer will be the lowest, approximately from 18 to 110 $ per hour.
The next rank is Middle. The price of such a developer ranges from $25 to $140 per hour. This is already a more trained developer who has some experience and more knowledge than a junior.
And the highest rank is senior. This is an expert in programming with a lot of experience. Accordingly, such a developer in outsourcing will cost the most. The average price is approximately $42 to $163 per hour.
Also, a lot depends on the specialization of professionals, that is, on what services and to whom you need to delegate. This could be a junior developer, mid-level developer, senior developer, QA engineer, project manager, or UI/UX designer.

Pricing

An equally important indicator that affects the cost of outsourcing it services is pricing. Some developers offer to pay by the hour. Someone immediately announces the entire price for the entire work process. As a rule, the final price may differ, depending on how the price is formed.

The main points that affect the price  Location of specialists, Technology, Specialization and rank of the programmer, Pricing

Cost Of IT Outsourcing Services On Average

As mentioned earlier, the average price depends on many factors, such as the skills of specialists, their rank, the size of your organization, and the complexity of your IT developments.

You may encounter different prices. But remember that a very small cost will not always mean that the services will be performed well. It is best to pay a little more but get quality services. Specialists with extensive experience and a good reputation will give bigger prices, but they will also provide services at a higher level. So keep this in mind.

Cost And Value Of Managed Service Provider (MSP) Services

A closely related term to IT Outsourcing is Managed Service Provider (MSP). This is a full delegation of IT tasks. As practice shows, it is managed service providers who show higher growth rates but also offer higher prices.
As a rule, outsourced it support costs show the quality of services. It is unlikely that specialists with low costs will be able to ensure the stability and durability of their work, as well as properly organize the internal processes necessary for the successful functioning of the business.

Signs That You’re Overpaying For IT Outsourcing Services

vallet, card and coins

There are different developers on the market, so you can “hit” those who will exaggerate the price of their services. In order to avoid this, you need to pay attention to certain signs.
Outsourcing specialists must offer a complete package of services for their price. That is, such developers should try as much as possible to analyze business processes related to IT, offer the best solutions, and try to minimize unforeseen costs. Also, your supplier should provide you with all the necessary consulting services on costs and analysis of the performance of the IT environment. If the price does not include such services, then most likely you are overpaying.
Another sign that you are paying more is the price of more than $200 per user. If we analyze the maximum prices on the market, then the figure for $ 200 is quite high.
Do not forget that the service provider must regularly perform the agreed list of works, provide you with everything you need, and provide real results.

The Advantages Of A Fixed-fee Payment Approach For IT Services

Your best bet is to look for an IT service provider with a fixed cost of outsourcing it services. Thus, your company can immediately allocate the necessary budget and understand the approximate picture of the necessary expenses.
This will help prevent you from future unwanted expenses that the service provider may not mention at the outset. You will also be able to provide yourself with quality services, because the supplier, in case of his mistakes, will be able to correct them for free and thus control your network.

Outsourced IT Vs Co-Managed IT

Before ordering a particular service, many entrepreneurs ask themselves how Outsourced IT differs from Co-Managed IT. Some people think that these are synonyms, but in fact, there is a significant difference between these two concepts.
If we talk about Outsourced IT, then in this case you get a full team of experts to whom you delegate your powers. Such specialists fully take on all tasks related to IT.
Co-Managed IT is a slightly different concept. Here you delegate only a part of your IT services. You decide which tasks remain within the company, and which ones you delegate to specialists.

outsourced IT vs co-managed IT

Pricing And Collaboration Strategies

Some other things that affect the cost of outsourcing it services are the collaboration model and service pricing. Which model to choose depends on your business goals. Therefore, it is important to discuss all the details with the service provider.

Project Outsourcing

The first approach that we will talk about is when the supplier takes all the tasks on himself. He is responsible for software development from start to finish. To do this, he can use designers, QA engineers, preparation of specifications, and so on.
When it comes to pricing for such a collaboration model, it is important to clarify that collaboration with a fixed fee will be beneficial for short-term projects.
Hourly pay is a more flexible collaboration model. It allows the customer to change the requirements, working conditions, suspend work, and so on.
But remember that regardless of pricing, the cost of the project will include the services of managers, architects, business analysts, and many more.

Dedicated Team

This approach to cooperation is suitable for huge projects with a large amount of work. In such a cooperation strategy, the supplier provides a whole team that is necessary for the successful implementation of the project. The work will be done by the whole team full time.

Extended Team

The extended command is a very interesting option. It is suitable for those who want to independently manage a development team. The main feature is that they can be located in different countries. For example, a QA engineer in America, a junior developer in Spain, and so on. You can independently communicate with each candidate and choose your desired team. Then your senior developer will build the workflow.
If we talk about outsource it services cost, then in this cooperation strategy you will pay wages to each team member. You can discuss pricing with them individually. Also, some service providers can make great offers for long-term cooperation, offer affiliate programs or discounts, which will help save your budget.

Managed IT Services Pricing

For managed services, the provider retains responsibility for the functionality of the service and IT equipment, and the customer typically pays a monthly fee to receive the service. In this way, the customer benefits from predictable pricing and the ability to focus on core business objectives rather than IT management tasks.

Outsourcing’s Extra Costs And Hidden Costs

The costs are not only in payment for managed IT services but also in other points that may arise.
First, you spend money when looking for the perfect outsourcing provider, especially if you do it with the help of some platforms. As a rule, web resources charge a fee for finding the right suppliers.
Working with many service providers is based on a contract, so you may incur additional costs associated with documentation.
In the process of work, a variety of expenses may occur, so allocate a budget with a margin.

The Final Word

Summing up, it is important to say that software development outsourcing is an ideal opportunity to attract real professionals to your business. Also, you save your money and get a high-quality result of work from specialists.
Remember that it is difficult to determine the cost of outsourcing it services because everything is very individual. As you may have noticed, the price is influenced by many factors, such as the experience of specialists, their reputation, cooperation strategy, and the features of your business. Remember that low price doesn’t mean high quality. So be careful when you choose outsourcing services.

Devox Software Team

Our marketing team consists of skilled content managers and creative designers. They highlight the latest topics in IT outsourcing and software development, do market research, analyze costs and programmer salaries.
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