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Subject Matter Expert’s Guide for IT Outsourcing
What is IT Outsourcing and How Does It Work?Outsourcing is the practice of using outside organizations to handle work frequently performed within a company. It's a well-known concept for many companies. Small companies typically outsource their payroll processing, accounting, distribution, and many other important features since they have no other choice. Many large companies went to outsourcing to reduce expenses. It is a viable solution to many operational issues for from small to enterprises. Today, millions of companies use some types of IT outsourcing, much of it involving the technology sector. A company would use IT outsourcing for features ranging from infrastructure to software maintenance, computer support, and development. In this guide, we'll lead you through IT outsourcing system and present their types, usage, definition, examples, and pros & cons.
Outsourcing TypesThere are 5 main types of IT outsourcing, determined by where the outsourced task performs.
- Onshore outsourcing: It includes contracting an external service provider, located in the same country as you, to provide IT-related task, remotely or on-site,
- Nearshore outsourcing: The operation of sending the IT-related task to an organization in a country which shares borders with your own. Practically, this should make communication and travel between the two companies easier,
- Offshore outsourcing: This type of outsourcing includes sending IT support to an organization in a foreign country, which offers political stability, lower costs, and tax savings,
- Cloud computing: Hiring an external service provider to provide IT services over the Internet, like infrastructure, platform, and software as a service,
- Managed IT service: This involves hiring a foreign company to provide network management features like IPs, messaging, call centers, VPNs, firewalls and network monitoring and reporting.
Why is Outsourcing Required?Outsourced IT can exactly meet your company’s needs, meaning you can implement IT solutions that help your current IT staff, replace current IT staff, or show up to handle a particularly challenging project. Here are the 5 reasons why to outsource IT.
Monitoring & SecurityKeep up with the technology to protect the business is expensive and time-consuming. Professional outsourced IT services work with multiple clients in many industries and are required to keep alongside industry's best practices. A reliable outsourced IT provider will provide the best security against malware, zero-day hacks, and other inbreaks. It’s their job to permanently monitor and update protection schemes 24/7.
Keep Pace with IT TechnologyIt's quite tricky that single IT employee can keep up to date with all the latest technological advances. Innovation and automation are the current foundations of IT technology. No employee can be a domain expert in all the various stages of IT that an organization requires: such as setup and management of servers, user support, application management. Outsourcing IT provides company’s access to a “set” of resources from their chosen seller.
Minimize Labor CostsThe main reason for IT outsourcing for many companies is reduced spending. Savings are significant, with some estimates as high as 37%. You don’t need to buy computer hardware and expensive software. You do not have the expenses of contracting employees to run IT functions. All services of an internal IT team, from application development to hardware installations to end user support can be outsourced. Along with reduced payroll comes reduced expenses for training and benefits. Outsourcing also makes costs predictable, with contracts specifying fixed monthly charges. IT outsourcing companies can often charge less for network access and support, than a business would pay the provider directly, since they buy in bulk and can pass on savings.
Focus on Core ActivitiesFor most companies, IT is a support feature, not a core competency. Building and supporting your own data center isn’t likely to provide a competitive advantage. Since your business isn’t technology, it’s difficult to recruit and keep an internal IT team with high-level skills. Outsourcing IT allows your management to focus on core competencies and business development, rather than struggling with technology problems. Additionally, outsourced IT services offer 24/7/365 support and guaranteed service level agreements that go beyond what your internal operations staff could perform.
Reduce RiskEvery business investment carries some risk. Markets, competition, state regulations, financial conditions, and technologies all change rapidly. Outsourcing companies assume and manage this risk, and they're much better at avoiding risk in their areas of expertise.
What are Some Examples of IT Outsourcing?Outsourcing is an excellent strategy that can really augment business, especially a small one. Here is the list of 3 often issues that small company staff has met.
Printer IssueTechnology can be wonderful when all systems are up and running. But when hardware or software won’t perform, delays are costly and frustrating. For example, printing takes too long. Nothing is worse than wasting quality time with a project and "hit the wall" when it comes to print. Save time, money, and recruit or contract IT outsourcing provider with reliable engineers and technicians that will solve this problem immediately.
Email Software ErrorUsers and companies use email to communicate in long form without using the phone. It’s not a replacement for the phone, it’s not a means to contact someone immediately. Yet the expectation is that will always work since is one of the crucial things for running a business. What if not work? You don't want "picture" in which your team bang their head and can't solve non-responding email app issue. But, for skilled outsourced management, the email issue is a "piece of cake" that they'll solve in a few minutes.
Virus IssueA computer virus often has a "trigger" such as a specific date or a particular program being run that will perform a benign event such as flashing a message on the user's screen. Some viruses will perform more malicious deeds, however, deleting, or scrambling the company's files or their entire system can cost money and reputation. Viruses are harmful since they compromise the integrity of the company system, data, and privacy or even private banking account passwords. For these problems, you really need a subject-matter-expert from IT provider that will eliminate these possibilities rapidly.
What are the benefits and risks of outsourcing IT services?Large companies and small often choose to outsource their IT systems and services for many reasons. This solution carries with it some obvious benefits and some not so apparent risks. Enterprises choosing to outsource IT must weigh the benefits and risks carefully, take measures to minimize the associated risks and prepare their staff for the change by running a campaign about the benefits of outsourcing. Almost always, the advantages of outsourcing overshadow the disadvantages of outsourcing. Keep track with rows below to see what the outsourcing IT pros and cons are.
- Money saver: While companies that outsource IT services enjoy many advantages, saving money is one of the most compelling reasons for doing so. Outsourcing control capital costs, especially in the early years of operations. IT services make up fixed outlays for companies that don’t outsource. Organizations that choose to outsource IT, whether offshore, onshore, or nearshore, convert those fixed costs to variable ones, delivering extra money for use in other areas. It makes the business more appealing to investors since the company has more money to spread into areas of operations that directly produce incomes,
- Compete with big companies: Big companies have the required resources to maintain cutting-edge services and systems by themselves. The same cannot be said of small to mid-size companies. Small and medium-sized firms very often don’t have the required resources or budget to implement IT systems and services on their own. Outsourcing IT services fills this gap between big and small companies,
- Starts new projects promptly: A right outsourcing provider has the resources to start a project instantly. Handling the same project in-house might involve taking weeks or months to contract the right folks, train them, and provide the support they require. And if a project needs significant capital investments, the startup process can be quite demanding,
- Upgrades company staff: A big project can demand skills that a company's team doesn't have. Therefore, the best option is on-site outsourcing of the project, where you bring in contractors to operate at your location and provide the staff who have the skills you need. Meanwhile, your staff can work beside them to acquire the new skill set.
- Operational control: Operations that are making costs that and running out of control should be considered for outsourcing. Departments that evolved over time into uncontrolled and poorly managed areas are good candidates also. An outsourcing company can provide better management skills to your company quickly and efficiently.
- Sharing important data: Sharing company information including company details or other data could be risky. So, be careful when choosing IT outsourcing provider for your business.