Is IT Outsourcing Right for Your Business? Weighing the Pros and Cons

If you own a business, you know how important it is to make sure that everything’s running smoothly and efficiently. One area that many business owners are having trouble keeping up with, however, is Information Technology (IT). Fortunately, the world has plenty of outsourced IT providers who can help alleviate this stress and relieve you of many IT-related responsibilities so that you can focus on what’s most important—running your business! 

Before you take a plunge into IT outsourcing or partnering with a Offshore Software Development & IT Consulting Company, here is everything you need to know that will allow your business to make the right decision.

IT Outsourcing: An Overview & Industry Outlook

The global outsourcing services market was valued at US$609.471 billion in 2019 and is expected to grow at a CAGR of 5.04% over the forecast period to reach a total market size of US$818.846 billion in 2025.

The outsourcing industry continues to embrace disruptive technologies, breathing new life into a mature but critical driver of the economy. 

What is IT Outsourcing?

Outsourcing involves hiring a third-party IT Outsourcing Services Company to handle all or part of your business’s IT needs. This includes software development and systems maintenance to data backup and disaster recovery. You may decide to outsource because you need more specialized skills than your team has, additional expertise, you’re short on time, or you’re not as tech-savvy as you thought.

What are Objectives of IT Outsourcing?

Here are some pros and cons of IT Outsourcing to help you decide if it’s right for your business.

Benefits to outsourcing your IT needs such as web and mobile app development:

1.) Access to a larger talent pool – When you outsource your IT, you can tap into a larger pool of highly skilled workers than you would have access to internally.

2.) Cost savings – One of the main reasons businesses outsource their IT is to save money. Hiring an external company will allow you to cut operational costs such as office space, utilities, taxes, equipment and other overhead expenses.

3.) Expertise – A trusted IT outsourcing services company can take care of your IT needs more efficiently than you could or with an in-house team because they specialize in what they do.

4.) Support – With so much information at our fingertips, it’s essential to keep up with the latest trends in technology. Having someone else take responsibility for your IT needs relieves you from dealing with everything when something goes wrong and gives you time to focus on growing your business.

5.) Skillset diversity – When you outsource your IT tasks, there is a higher chance that one person within the company has expertise in multiple areas like coding and system design.

6.) Flexibility – If you don’t know exactly what skill set you need now but may need them in the future, then hiring a IT consulting services company means that you don’t have to invest time training someone to realize later that they don’t have the skills needed. 

7.) Training flexibility – You also won’t have to invest time training people who might not stay long term. Depending on your contract with the agency, employees are assigned temporarily or rotated between projects based on the current demand for those skill sets.

Enterprises of all shapes and sizes are already grappling with embracing the concept of the new normal. Businesses are already grappling with the idea of a “new normal” – a term that epitomizes change in ways of working. The agility with which organizations respond and adapt to the new normal will determine who will fall behind and thrive in the post-pandemic world. 

However, the uncertainty created by COVID-19 has instilled caution as everyone in the industry adjusts to changes and disruptions caused by the pandemic.

Drawbacks of Outsourcing your business’ tech needs

There are a few potential drawbacks to outsourcing your business’ tech needs. 

• First, you may not have as much control over the work being done. 
• Second, you may have to pay more for services than if you were to do them in-house. 
• Third, communication issues could arise if you’re working with an offshore team.
• Fourth, you may not be able to get the same level of customer service as you would from an in-house team. 
• Fifth, many outsourced companies require that you sign long-term contracts or make significant investments upfront.
• And sixth, it’s harder to keep employees on hand who know how to use new technology if they’re busy helping other businesses.

Tips on how to make IT Outsourcing work for you

If you’re considering outsourcing your IT needs, you should keep a few things in mind to make sure it’s the right fit for your business. You’ll need to decide which outsourcing model makes the most sense. Then, you’ll need to consider the pros and cons to see if it’s genuinely worth it. Here are a few tips to help you do outsourcing work for your business

1) Determine what type of outsourcing model is best for you.

2) Be aware of any potential risks before making the leap

3) Explore all options before committing

4) Consult a specialist before making any decisions

IT Outsourcing Models

There are three standard models for IT outsourcing: project-based, staff augmentation, and managed services. 

• Project-based outsourcing is best for one-time projects or short-term needs. 
• Staff augmentation outsourcing can be a good solution when you need extra help but don’t want to add full-time employees.
• Managed services outsourcing is a comprehensive solution that can provide long-term support for your IT needs. It may be the right choice if you want to outsource your entire IT operation.

A vital benefit of this model is that it often includes installing new software systems, infrastructure upgrades, and disaster recovery planning.

IT Outsourcing Engagement Models

All businesses have their own needs when it comes to IT outsourcing. Some companies focus more on innovation and research, while others need a reliable partner, providing IT outsourcing services to manage large-scale projects. When deciding on an outsourcing model, it’s essential to consider what you are looking for in an outsourced company and what they offer in return. To help you make this decision, we’ve provided quick details of popular engagement models. 

1.) Time & Materials (T&M): In this model, the client pays for all costs incurred by the service provider, including labor hours and hardware, software, maintenance, and administrative costs. 

2.) Fixed Price: The fixed price model is exactly as it sounds – clients pay a set price regardless of resources or hours used. 

3.) Dedicated Hiring: Hire expert developers for quick team scaling or hire a developer for emerging/niche technologies.

Finally

Like many businesses, you may be considering IT outsourcing services for your development and maintenance needs to improve your bottom line and achieve better profits. Understanding which engagement and pricing model best suits your business needs is essential, allowing you to make an informed decision that aligns with your business goals.

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Albert Smith

Albert Smith, Marketing Manager at Hidden Brains, drives brand growth with innovative strategies in web, mobile app, and software development.