IT Outsourcing: Associated Reasons, Risks & Rewards

As one of the decision-makers in the company, you have perhaps thought of IT outsourcing some aspect of your business. The benefits of outsourcing seem obvious, touted by experts across numerous industries as the answer to cutting costs for business functions ranging from information technology to accounting, marketing and human resources; it seems possible that you could run an entire company without ever hiring a single employee.

But is there more to outsourcing than the bottom line? What are the other reasons companies choose this route? What about ramifications for aspects of your business those are not so easily quantified?

This blog details about the 3 R’s of outsourcing: Reasons, Risks and Rewards, specifically as they relate to information technology (IT). And, as a bonus, we’ll provide some tips to help you manage successful relationships with your IT service providers (whether they are full-time staff, or outsourced).

The Reasons: There are several reasons why the companies outsource to an offshore vendor. The top reasons are as follows:

Reduce and control operating costs. When you outsource, you eliminate the costs associated with hiring an employee, such as management oversight, training, health insurance, employment taxes, retirement plans etc.

Improve company focus. Outsourcing lets you focus on your core competencies while another company focuses on theirs. Gain access to exceptional capabilities. Your return on investment is so much greater when you outsource information technology to a firm that specializes in the areas you need. Instead of just the knowledge of one person, you benefit from the collective experience of a team of IT professionals. Outsourced IT companies usually require their IT staff to have proper industry training and certifications as well.

Free internal resources for other purposes. You may have people in office who are good with computers or accounting, but most likely they won’t have been hired to perform those roles. If they are spending time taking care of these things, who is doing what they were hired to do? Outsourcing lets you to preserve employees for their maximum and finest use, rather than degrading their time on tasks that may take them longer than someone who is trained in these specific skills.

Resources are not available internally. On the flip side, maybe you don’t have anyone in your company who can manage your IT needs, and hiring a new employee is not in the budget. Outsourcing can be a reasonable substitute, both for the provisional and for the continuing.

Maximize restructuring benefits. When you are restructuring your company to improve costs, quality, service, or speed, your non-core business functions may get pushed aside. The employees still need to be controlled, however, and outsourcing is a finest way to do this. Don’t interrupt your streamlining efforts by failing to keep up with non-core requirements.

Function difficult to manage or out of control. This is definitely a scenario when outsourcing to experts can make a big difference. But don’t make the mistake of thinking you can forget about the problem now that it’s being “handled.” You still need to be involved even after control is regained.
Make capital funds available. By outsourcing non-core business functions, you can spend your capital funds on items that are directly related to your product or your customers.
Reduce Risk. Keeping up with technology required to run your business is expensive and time consuming. Because professional outsourced IT providers work with multiple clients and need to keep up on industry best practices, they typically know what is right and what is not. This kind of information and understanding naturally moderates your risk of executing a costly wrong decision.

The Risks

Anytime you give someone else responsibility for an aspect of your business, whether a full-time new hire or an outside vendor, there is risk involved. Did I hire the right person/company to do the job? Will they do what they are supposed to do? How will they “fit” with existing employees or departments? These are the questions that nag owners of small businesses when handing over the reigns to a new employee or vendor.

According to Yvonne Lederer Anotucci in her article “The Pros and Cons of IT Outsourcing,” business owners who consider outsourcing IT functions need to be aware of the following risks:

Some IT functions are not easily outsourced. IT touches whole business; from the modest tasks employees do every day to the multifaceted automated facets. Be sure the outside vendor is qualified to take care of your greatest needs.

Control may be lost. Criticizers debate that an external vendor will never be as operational as a full-time worker who is under the same management as further employees. Other concerns include confidentiality of data and disaster recovery. However, a supervisor that is knowledgeable in managing an IT staff member will usually be required.
Employee morale may be affected. This is predominantly factual that if you will be positioning off employees to switch their job functions with an outsourced company. Other employees may wonder if their job is at risk, too.

If the vendor doesn’t document their slog on your system and network, or if you’ve had to buying their copyrighted software, you may feel like you can’t go anywhere else or take back your network. Many outsourced companies require you to sign a year to year contract which limits flexibility.
Most of these risks can be evaded overall if you know what to consider for in a vendor and ask the right set of questions. Wondering how your current or prospective IT service provider stacks up? Take Corporate Computer Service’s Support Provider Ranking Quiz at: www.corpcomputerservices.com/computer-support-quiz.php. These questions will get you thinking about what to ask and what to look for, whether you want to hire a full-time IT professional on staff, or outsource to a support provider.

The Rewards

Still not sure whether to outsource or not? There are several plunders you can anticipate when you outsource your company’s IT tasks as well:

Access to the latest and greatest in technology. You may have noticed how rapidly software and hardware becomes obsolete in this industry. How is one staff person going to keep up-to-date with everything? Outsourcing stretches you with the advantage of having more than just one IT resource at your service. And since it’s the core competency of the company, they can give you sound advice to put your IT dollars to work for you.
Cost savings. Outsourcing your IT department affords financial paybacks such as slenderer overhead, bulk procuring and hiring choices for hardware and software, and software licenses, as well as probable amenability with government regulations.

High quality of staff. Since it’s their core competency, outsourced IT vendors look to hire staff with specific qualifications and certifications. You may not know what to look for if you’re hiring someone to be on staff full-time, so you may hire the wrong person for the job.

Flexibility. Vendors have multiple resources available to them, while internal staff may have limited resources and capabilities.

Job security and burnout reduction for regular employees. Utilizing an outsourced IT company eliminates the weight from your office staff who has taken on more than he or she was employed for because “someone needs to do it.” You will establish a better relationship with your employees when you let them do what they do best and what they were hired to do.

Conclusion:

Now that you have observed the threats and recompenses related with outsourcing the IT function of your corporate, there is a lot to think through about. Whether you choose to outsource or hire internally, one thing is certain, you must know how to manage successful working relationships with your IT service providers. Let’s face it, they’re not always the easiest people in the world to understand and deal with, right? Here are some tips:

Clearly form and communicate the goals and objectives of your project or business relationship.
Have a strategic vision and plan for your project or relationship.
Select the right vendor or new hire through research and references.
Insist on a contract or plan that includes all the expectations of the relationship, especially the financial aspect.
Keep open communication with all affected individuals/groups.
Rally support and involvement from decision makers involved.

If you are looking for Best IT Outsourcing and Offshore Development Company in India, UK, USA, Canada, Australia, London, Mumbai, Bangalore, and Delhi or from anyplace globally, get a free quote immediately. Please write to us, “Why Our IT Outsourcing and Offshore Development Company is the right choice for your projects?” and feel free to ask for more information.

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