Delegating a company’s technology functions to an IT outsourcing firm is a smart move, especially for companies looking to access talent and resources that are challenging to find.
Businesses today are navigating a highly competitive market that integrates technology in almost all areas of the enterprise. Having an efficient staff to manage this enterprise technology can help companies stand out through IT outsourcing. If you want to learn more about IT outsourcing and how it can help your business, this guide will be of help to you.
What is IT outsourcing?
According to research firm Gartner, IT outsourcing refers to enlisting external service providers to enable IT-based business processes, infrastructure solutions, and application services that foster positive business outcomes.
Different areas like cloud-based outsourcing, software as a service (SaaS), and utility services are also included in IT outsourcing. These services provide enterprises the choice of an outsourcing strategy that considers their business requirements.
IT outsourcing includes the delegation of unique, one-time system development projects and ongoing IT services like desktop support, mainframe hosting, telecommunications maintenance and installation, and legacy system support and maintenance.
Businesses that shift from in-house services to partnering with third-party service providers are increasing in number. The recent total contract value IT outsourcing is US$ 66.5 billion worldwide, accounting for more than 70% of the world’s overall outsourced services market size (US$ 92.5 billion).
A study reveals that the common motivations for IT outsourcing involve financial issues and broad access to experts that firms do not possess internally. IT outsourcing is shown to be a well-established practice today and is quickly becoming one of the essential management tools in the modern economy.
Types of IT Outsourcing
IT outsourcing services are categorized into three types, depending on where the worker or firm is located:
- Offshoring. Companies take advantage of lower costs and a more dependable economic climate by enlisting outsourcing firms from other countries.
- Nearshoring. IT outsourcing wherein work is delegated to a provider in nearby countries, often sharing a border with their own.
- Onshoring. Outsourced employees are permitted to work from home instead of the physical workplace.
In terms of IT functions, two categories differentiate the type of IT outsourcing services rendered:
- Infrastructure outsourcing. This type may include one or more services, such as service desk support, data center outsourcing, managed IT security, networking services and overall infrastructure management.
- Application outsourcing. Services included here are legacy system maintenance, new application development, package software management and implementation, and QA and testing services.
Some services in today’s outsourcing model make use of both types, especially in cloud-based systems. More than a third of the outsourcing market now uses cloud services in part or on every aspect of the enterprise.
Benefits of IT Outsourcing
There are many immediate and long-term benefits that can stem from outsourcing IT functions and environments for businesses:
Reduces Employee Costs
Costs are the most immediate driving force for companies that outsource for some or all their IT concerns. Contracting an offshore or local IT expert is typically less expensive than hiring a full-time employee.
Whereas an in-house staff needs to be trained and offered mandatory insurances and allowances, a service provider can be paid on a per-project basis, which is very useful for short-term goals that require specific expertise, such as IT infrastructure or software development.
IT outsourcing service providers ensure that their professionals are highly competent through constant training and certifications on a niche they choose, which makes them highly qualified to take on the job that you require.
Control IT Expenses
Pricing of goods and services is highly dependent on operational costs, including the in-house infrastructure and workforce. With outsourcing, several IT expenses like setting up networks or hiring internal service desk workers are reduced or removed. It is also easy to scale up or down the services, based on what you require.
Availability of Resources
IT-related issues inevitably take a huge chunk of time, resources, and effort from the company. When you delegate IT tasks, you open your business to a pool of talents and resources which in turn, frees up valuable internal resources to focus on mission-critical business aspects, like product development, marketing and customer experience.
IT outsourcing firms specialize in what they do, which ensures risk reduction for you. This risk-sharing function shifts some responsibilities to the service provider, lifting the burden from your workforce.
Should Your Company Outsource IT?
Cost, flexibility, and expertise are some of the motivating factors for hiring IT outsourcing experts. However, always remember that it’s crucial to determine your company’s needs first before giving the go-ahead so you get the most benefits out of the outsourcing experience.
Yempo offers high-caliber, affordable IT development and IT infrastructure services to small and medium-sized businesses anywhere in the world. Contact us today to learn more how our services can help you.