It has been a hot topic to outsource IT operations and development for years. It is easier to access subject matter experts, offers better disaster recovery, and reduces costs. These are some of the benefits of IT outsourcing.
It introduces however more problems, such as a more complicated delivery model, security and privacy concerns, less visibility, and reduced control of an organization’s IT infrastructure. It also makes it more complicated to map IT deliverables to organizational business objectives.
In this article, we present the main characteristics, advantages, and challenges of IT Outsourcing and how E2logy can assist you in achieving your strategic objectives in the face of a global economic crisis.
What is IT Outsourcing?
In the beginning, let us look at what IT outsourcing is, to begin with before we delve into the pros of outsourcing IT services.
An organization can search for an external vendor to handle various IT functions by outsourcing these functions. Many IT services are commonly outsourced, including software development, web development, website maintenance, technical support, database development, management, etc. There are many types of IT outsourcing, such as offshore outsourcing, nearshore outsourcing, and onshore outsourcing. All of the above types of outsourcing involve companies contracting with third-party vendors to do IT-related work. Outsourcing enables enterprises to achieve cost reduction, accelerate time to market, and enhance their intellectual property, assets, and assets through external expertise.
IT Outsourcing in the current global context
During the COVID-19 pandemic, remote working is becoming more prevalent as a way to practice social distancing. A unique business initiative prompted by the World Health Organization has helped manage the novel Coronavirus daily.
Employees working from home is becoming a challenge for European companies. Numerous of their employees are also working from home, which causes them to deal with processes they wish they had automated. As a result, many European companies will be eager to open up their work processes to automation and digitization. As a result, outsourcing will become more accessible in the future. Thus, it may be more likely for European companies to outsource their business processes or IT to other countries in the long run.
Compared to other industries, companies from all over the world have numerous understanding. There is an ongoing crisis that is affecting everyone. The majority of companies will understand and be flexible when deadlines cannot be met or schedules have to be changed. Communicate with your outsourcing partners as often as you can. Transparency about the project’s status and the methods you will use to accomplish it is essential. Be sure that your clients understand that you are providing the best service possible.
Types of IT Outsourcing
There are a variety of types of IT outsourcing, which differ depending on where and how they work is outsourced. Among them are:
1. Outsourcing projects
Software Development Outsourcing is also known as Nearshoring, Offshoring, etc. All project information is gathered by the company and is then provided to the external outsourcing provider, who handles the entire software development, quality assurance, and project management on its behalf.
2. Out Staffing
Body leasing is also known as leasing. Outsourcing is a model in which the company hires the time employees from providers of IT outsourcing. Most companies contract with these companies on an hourly or monthly basis.
3. Opening of R&D Center
Often referred to as Offshore Offices. Research and Development Offices (usually under the same brand name) are opened by companies in other countries where local employees are employed by the company.
IT Outsourcing Benefits for Your Business
The benefits of IT outsourcing are numerous, both for small businesses and for the largest corporations. It can offer more than just cost-savings because it is a great strategic tool. However, how is outsourcing IT advantageous? Among the benefits are:
We can manage IT tasks and spikes in workload more efficiently and effectively through outsourcing. What is even better is that you do not have to overspend on hiring and then firing internal employees. In particular, this is convenient for organizations that require a particular skill for a brief period.
2. Experts in a wide range of fields
One of the most significant benefits of outsourcing IT services is access to a wide pool of qualified experts and rare resources. There might sometimes be difficult to find an employee with specific skills within the company. Furthermore, training those skills can be difficult. As such, it makes more sense to hire an outsourced service provider who can provide the resources necessary and fulfill the needs of your business in terms of skills and technologies according to your needs.
3. Focus on your company’s core activities
Through task outsourcing, you can increase the power of your team. Small and medium-sized businesses, without extensive IT resources, are especially in need of this type of support. It is better to let the experts handle tasks that workers are not well versed in, rather than overload workers with tasks they do not know. This allows the team to focus on the most important operations. Those companies that operate outside of the IT world especially benefit from IT outsourcing. It is always best to outsource all the IT tasks to a single service provider if this is the case.
Outsourcing IT services offers the possibility of saving money. In Deloitte’s research, we will see that 59% of companies choose to outsource IT services because the savings are substantial. However, how are those savings be achieved? Cost-effectiveness is achieved through outsourcing IT because it eliminates the need for hiring and training new employees, which is an expensive process. On top of that, a company that outsources can forgo extra costs and hidden fees such as buying expensive hardware and software, renting office space, and paying taxes, among others. Due to their accessibility to inexpensive regions in terms of IT development (Ukraine, for example), outsourced service providers can reduce labor costs considerably.
5. High productivity
The performance will improve and results will be quicker if the workload is divided into multiple functional parts. The goal of outsourcing is to achieve these results. Certain tasks are delegated to external experts and done in tandem with your core business duties. The time difference makes it possible to continue working uninterrupted due to the time difference. Therefore, you get a faster development process.
6. Knowledge of the industry and innovation
Your employees are hands-on and know your business like the back of their hands. When it comes to processes that workers are used to doing, however, this knowledge can stand in the way of using innovative approaches. There is a decent chance you are not aware of the latest trends in the industry if you do not have anything to do with information technology. Outsourcing IT is a good idea because you will be able to obtain an innovative point of view on what your company needs from IT.
7. Equipment that you do not need to buy
A major advantage of outsourcing IT services is that you do not need to spend thousands of dollars on expensive equipment and software that you might need for just a few small tasks. Those companies that provide IT outsourcing services will ensure you get top-notch IT products because they take care of everything for you.
8. Risk management
As you work with a full-cycle IT company, you are likely to share the risk of service outages with them. They may also provide disaster recovery and data security services. When signing an agreement, it is advisable to include these.
To wrap things up, let us ask the question once more. Is outsourcing a good idea for you?
Outsourcing is a powerful tool in the IT space, and there is no arguing with that. Whether you like it or not, outsourcing IT tasks and functions to experts is usually a good idea in most cases. The benefits of IT outsourcing are not without any downsides, though. It does have a few drawbacks that could stymie its implementation. You should carefully weigh all pros and cons of outsourcing before taking any action. You do not need to assume that potential risks that are associated with outsourcing cannot be avoided. A proper approach to selecting an outsourced service provider and to writing a contract will minimize risk to the bare minimum.