What are the current outsourcing trends? That is a million-dollar question that needs a panoptic response. But there’s one thing we all know for sure: IT outsourcing is gathering steam, introducing irreversible changes to global businesses. This statement isn’t mere…
What are IT Outsourcing Services?
IT outsourcing services refer to the business practice when companies delegate IT-enabled business processes to external service providers. Along with full-scale processes, organizations can also farm out application services and infrastructure solutions, as well as a spectrum of other tech roles. Some of these services include cloud hosting, web design, and cybersecurity, as well as QA testing, business applications, and others.
Today, IT outsourcing is on everyone’s lips. It embodies a new way to adapt to new pandemic challenges and foolproof business continuity. According to Statista, the spending on outsourcing IT services is projected to grow up to 1.2 trillion dollars worldwide in 2021. This is almost 10 percent higher compared with the previous year, due to the economic impact of the COVID-19.
However, IT-outsourcing still stirs up prejudices making companies shun this business practice.
With that in mind, we decided to lay it all out for you. This post aims to go over the main pros and cons of IT outsourcing services so that you’ll make the right call. So if you’ve been wondering ‘What is IT outsourcing?’, this post will satisfy your curiosity.
Disadvantages of Outsourcing IT Services
In the right realm and deployed competently, IT outsourcing services can be a great auxiliary for business owners to boost performance and support their company’s mission. However, outsourcing IT is not the magic bullet. Just like any other business practice, it has both downsides and upsides. Let’s start with the cons of IT outsourcing services.
Things get lost in translation
Traditionally, the most agile and affordable outsourcing providers are scattered around the globe. It sometimes translates into different native languages and mindsets. The developers may be well-versed in strategic areas, but if linguistic divides are the case, IT outsourcing services can become an uphill struggle.
Thus, a simple misunderstanding of the tense of a word can challenge your project. Also, cultural gaps can inhibit the development process. But as the companies have demonstrated more cultural adaptability over the last few years, the latter is rarely the case.
Time zone issues
If you outsource IT services between different time zones, you end up with a double-edged sword. On the one hand, your team is operational 24/7 and keeps all processes ongoing. On the other hand, different time bands can also pose an obstacle to the effectiveness of IT outsourcing services.
For example, they can slow down the turnaround time at which your team gets to clients or even employees. Or if any project blocker occurs, your team can either assume your preference or wait for your answer. In both cases, you have the possibility of misunderstanding, downtime, or rework.
Therefore, we’d recommend outsourced IT services with overlapping hours and clearly negotiated project requirements.
Hurts employee morale and job satisfaction
Your in-house workers, especially those in clerical job positions, might feel unsettled about outsourcing. This leads to lower morale, decreased productivity, and accelerated job-hopping. IT outsourcing services can also cause confusion over the division of on-site and outsourced tasks. But still, this business practice is far from inducing widespread job-security jitters.
Even though IT outsourcing services are often associated with supreme operational flexibility, the level of tech services is limited by the outsourcing contract. It means that the outsourcing vendor is accountable only for the tasks articulated in the contract using the technology platform it considers applicable. You may avoid this lock-in by covering this point in your agreement.
The one thing that unites all these disadvantages is that those mishaps can be eliminated by the right choice of your IT outsourcing provider.
Now that we’ve described the main downsides, let’s go over the advantages of IT outsourcing services.
The Benefits of IT Outsourcing Services
Due to the COVID-19 outbreak, remote work is becoming the new normal. The pandemic has jolted many companies into modernizing and embracing the fact that we are no longer shackled to the office. All these have positively shaped the image of IT outsourcing services and removed the stigma.
So it’s no wonder that the advantages of IT outsourcing services significantly countervail the cons. Here is why an increasing number of companies choose to outsource IT services.
Tough economic times have led companies to face downturns that resulted in the loss of jobs or the closing of their doors. Even A-list corporations like IBM and General Motors experienced large-scale layoffs in order to stay resilient. This is when IT outsourcing services can lend a helping hand.
Technology partners can help companies cut costs, since:
- The vendor takes over costs on long screening & many interview rounds.
- Fringe benefits and overhead structures are also on the outsourcing partner.
- IT outsourcing services are usually delivered by low-cost labor pools in offshore countries.
- There are no costs associated with training employees.
- Vendors turn to more effective bulk purchasing and leasing arrangements for all hardware and software.
- You get the next-gen technology stack at a lower price compared with Silicon Valley companies.
In general, cost-cutting has always been the number one outsourcing driver since 2016 and remains that till this very day.
Workplace flexibility is important when it comes to the hectic business world. Similarly, IT functions should evolve fast enough to back up the fluctuating demands. IT outsourcing services allow companies to handle cyclical demands and bring in additional resources when needed. The outsourced team can then be released on demand, contributing to a company’s flexibility.
Access to new resources and technologies
The local market may often fall short of satisfying developing IT needs. Therefore, IT outsourcing services allow companies to tap into new areas otherwise unavailable and grow their market reach to new territories. Thus, if a business would like to expand its operations, especially into an unprobed market, outsourcing is a viable alternative to building the necessary capacity from the ground up.
The modern business environment goes through various alterations. And these changes entail both opportunities and threats which your business must stand up to. Delegating new IT operations to external businesses or consultants will allow you to quickly fill in information technology roles required for your business.
Tech support is a wide range of services that vendors provide to their clients to help manage software. Outsourced technical support entails quite a range of secondary benefits as well. First of all, you won’t need to hire an in-house specialist and cover related expenditures to support your system. Also, high-quality follow-up services are a distraction from your core mission.
Hence it’s easier and more effective to off-load these operations to a technology vendor with the relevant competence. This incentive is especially significant for small and medium businesses that want to propel further growth.
Staff training is expensive. But the absence of the aforementioned can lead to sloppy work, eventual employee turnover, or dated IT practices. IT outsourcing services, on the other hand, mean that outsourced software specialists have already received specific and consistent training. Thus, your company will stay in the know with new products, services, or IT processes.
Enhanced security and shared risks
The cybersecurity skill gap is a common problem that plagues businesses. As a result of cybersecurity threats and attacks, companies may lose data or put their customers at risk. IT outsourcing services offer cost-effective access to specialized security tools, the latest patches, and expertise on a shared basis. Moreover, managed IT functions also come complete with secure infrastructure and supreme data security.
Nobody is safe from a disaster. Without managed operations, your business continuity team will have to be made up of current employees. It also means putting aside their core tasks and pushing them out of their expertise. On the contrary, IT outsourcing services can minimize the explosion area and back up your business continuity plan. In this case, you can continue to function with as little disruption as possible.
Managed disaster recovery and data backup
The mere thought of an IT disaster sends chills up business owners’ spines. And for a good reason. As much as 60% of companies shut down as a result of data loss. IT outsourcing services guarantee your business survival after an unexpected data-loss event. Vendors usually offer comprehensive data protection activities, including backup, replication, failover, and failback.
Supervising a company’s information technology and computer systems is an essential position. Therefore, most companies cannot function properly without a Chief Information Officer. It presents no problem for larger companies with plenty of resources, but small or medium-sized businesses often bite the bullet and shell out for a CIO. If your bursting budget cannot take another huge tech role, IT outsourcing services will provide a virtual CIO to plan everything from cloud migrations to long-term IT strategy.
Supreme customer support
Outsourced technical support and help desk teams are the viable IT-support sourcing option that helps handle technical issues and resolve problems quickly. They also offer an easy and cost-effective way for companies to overhaul customer support and free in-house workers to focus on value-add priorities. Especially if your departments are stretched too thin to deliver a high-quality support structure in these dire times.
Custom business solutions
On top of it, IT outsourcing services are also experiencing a surge of interest in the realm of tailored software products. If you need to make a statement and raise your business exposure, a custom application is an indispensable business asset. And an outsourcing vendor can provide you with wide expertise in business domains combined with tech solutions to support your business needs and requirements.
Complete network management
Finally, you can hand over the entire architecture to professionals and have predictable networks managed by the outsourcing company. While outsourcing network operations, maintenance, and security, a business can tap into a leaner and more concise workforce. And with in-house IT for network management tasks eating up to 70% of your budget, contracted services present a win-win solution from the financial perspective.
The COVID-disrupted era imposes its terms and conditions. No wonder that old-school business practices and traditional hiring no longer suffice today’s challenges. Along these lines, IT outsourcing services have grown to become the go-to business model in the evolving tech landscape.
Global companies including rock-star enterprises are shifting their IT operations to tech vendors en masse to access a great number of benefits. Reasons for outsourcing mainly include lowering operational costs, reducing the need for internal staff training, and generally growing the effectiveness of a company’s tech efforts.
If you’re looking to quickly adopt this business practice, our team of dedicated IT specialists provides quality tech-driven solutions and skilled talents to businesses of all sizes.