Almost every company nowadays depends on IT, even if information technology isn’t part of your core business. And as you grow your company, you will have to hire more staff to run your IT system, or to develop the software you need. However, good IT experts are hard to find and their salaries are very high, due to the increased demand.
Also, as you hire more IT staff, you won’t just have to pay their salary, you’ll also have to find office space and computers for them, provide them with additional benefits, and invest resources to manage them appropriately. This is one of the biggest challenges for many businesses, which prevents them from scaling as rapidly they should.
But there is another option available, which is to outsource part of your IT operations. One might think that IT outsourcing is meant for only large organizations, but today there are lots of options that make IT outsourcing perfect also for small companies. When you outsource some of your IT operations, you can save yourself a lot of stress, and you improve your production output while spending less.
In this article we’ll discuss the advantages and disadvantages of IT outsourcing, so you can see for yourself and decide if IT outsourcing will be good for your business or not.
Outsourcing Vs. Offshoring
Outsourcing is the practice of hiring outside staff to handle jobs or tasks instead of hiring in-house staff members to do so. Various tasks can be outsourced including accounting, IT support, call center support, manufacturing etc.
Sometimes the terms offshoring and outsourcing are used as synonyms, but they are actually very different from each other. Offshoring involves moving different internal operations to other countries, so they can be performed at reduced costs, while outsourcing involves contracting outside providers for functions that are typically handled by in-house staff.
Why Consider Outsourcing?
IT outsourcing doesn’t fit every business, but many companies can potentially benefit from outsourcing. There are lots of activities that aren’t part of your core business, and that don’t necessarily have to be carried out in your company.
The following are some of the most important reasons for choosing IT outsourcing:
Scale up rapidly
Do you want to expand your business operations, but it’s too expensive to pay for the additional staff and resources? If you were to hire new staff, you will need to provide new offices for them, add them to your payroll, get more furniture, computers and other things like medical benefits etc.
But when you choose IT outsourcing, you won’t need to spend so much money before you scale up your operations. This is because the outsourcing provider covers most of the overheads, while still offering you a lower rate.
Reduce operational costs
Are you finding it hard to keep up with operational costs in your organization? With outsourcing, you can save a lot on operational costs. This money can be used to expand your business in other ways.
Cover several time zones
It can be difficult to find staff that is willing to work at night. But if you outsource jobs to people in other countries, you can cover several time zones, so your business can keep running even at night.
Get access to expensive experts
Sometimes, you may need to hire people with rare skills to handle you operations, but you find yourself unable to afford their wages. In some outsourcing locations, those rare skills command a much lower pay rate. So you can outsource these operations, and get access to skills you would not be able to afford otherwise.
The Pros Of IT Outsourcing
Access to new IT skills
Sometimes, it is difficult to get skilled employees in your location. But with outsourcing, you can enjoy the services of skilled workers all over the world. You will get the skills you need much faster with the help of a good IT outsourcing provider.
Focus on your core business
When you have too many staff to manage, you may lose sight of your core organizational goals. But with outsourcing, you can focus on the relevant business issues, and allow the outsourcing company to handle the rest for you.
Reduce your IT operational costs
When you outsource, you cut the cost of hiring staff and spending money on their infrastructure, payroll, accommodation, etc. Some service providers can also provide you with fixed costs that will help you save even more money.
Scale your company fast
It can be expensive and difficult to scale up your IT operations. You will need to add new staff to your payroll, procure new furniture and equipment, get more office space etc. But with IT outsourcing, you can scale up at a faster rate since a lot of these costs are covered by the outsourcing provider.
The Cons of IT Outsourcing
Cultural differences
When you outsource, it’s likely that people from other countries will work for you. They probably have a different workplace culture and ideals to you. Because of this, there might be some conflicts or misunderstandings, so it’s helpful to acclimatize them with your organizational culture to make sure there won’t be any issues.
Reduced day-to-day control
When you outsource, the people you outsource to are usually not under your direct control. This means that you don’t have as much influence over them as you would if they were working in your office. To avoid this, ensure that you are outsourcing to an experienced outsourcing provider that you can trust.
Lock-in contracts
Some outsourcing companies require that you sign long-term contracts with them. Some require that you spend a minimum amount of money in order to use their services. This is because they are aware that they are saving you a lot of money in the long run. Before committing to anyone, ensure that you select a company that makes it easy to get out of their contract.
Disgruntled local employees
When you outsource, your local employees may feel threatened, since you could be planning to outsource their jobs too. This could affect their morale and their overall performance. Get a good service provider that will help you handle the outsourcing process in a way that your employees’ morale won’t be affected.
The Best Countries for IT Outsourcing
In most cases, countries that have a low cost of living are the top IT outsourcing destinations, to take advantage of the reduced cost of workers. There are a range of countries in Eastern Europe and Asia that offer highly talented and motivated IT specialists for outsourcing.
The following are the 3 most popular countries for outsourcing:
The Philippines
The outsourcing sector makes up about 8% of the GDP of the Philippines. More and more companies are choosing to outsource to the Philippines, so this number is continually rising.
In the Philippines, there is an excellent work culture, which can be traced back to their history. Filipinos are majorly Catholics, and they are raised to believe in hard work, integrity and honesty.
Another advantage is the excellent quality of English spoken in the Philippines.
Malaysia
Malaysia has a dynamic ICT sector and the Malaysian government aspire to generate at least 200,000 jobs and 3 billion dollars in revenue from the ICT sector by 2020.
The Wall Street Journal and the Index of Economic Freedom ranked the country the 59th freest economy globally.
India
India is currently the most popular country for outsourcing. India has one of the fastest developing infrastructures in the world, and it has a yearly growth rate of 25-30%.
The country also has one of the fastest Internet connections in the world which means that you won’t experience delays in communication or hitches.
The Indian government has invested a lot in technology and infrastructure making things better for those that are willing to handle outsourced jobs.
The Most Commonly Outsourced IT Roles
IT is one of the biggest sectors for outsourcing worldwide. It is estimated that the IT outsourcing industry generates at least 60 to 70 billion dollars in revenue annually. This is not taking into account SaaS (Software as a Service) and cloud-enabled outsourcing. Almost 95% of IT organizations outsource their disaster recovery plans, as this is less expensive.
The most popular IT functions that are outsourced are disaster recovery services, IT security, application testing, data center operations, application development, e-commerce systems, help desk services, web systems, application hosting, database administration, application maintenance and network operations.
The following are the 3 most commonly outsourced IT roles:
Web Developers
Web developers or designers are responsible for the design and maintenance of websites. They create code for the layout, functions and features of the website. Developers are responsible for creating a webpage while designers create the design of a website.
Systems Engineers
Systems engineers are IT professionals that use their knowledge of computer engineering, science and mathematics to develop and evaluate enterprise IT systems. They provide advice to clients on hardware and software needs, and help to secure the system from malware and other threats.
Software Engineers
A software specialist applies software engineering principles to the evaluation, testing, design, development and maintenance of software tools that can be run on computers and smartphones. Software engineers are responsible for creating custom systems for clients, and implementing every phase of the software development processes.
How To Select A Good IT Outsourcing Partner
The most important aspect of outsourcing is selecting the right partner. The partner you choose can help to grow your business, or make you lose money and time. So you need to take your time to select the right provider. The following are the key aspects to consider to choose the right IT outsourcing partner:
Determine how much you are willing to pay:
Pricing is a touchy factor when outsourcing. You must find the right price – one that won’t be too costly for you, and one that the other party will readily accept. Keep in mind that the cheapest companies are not necessarily the best. Try to find an optimal balance between cost and quality. It is best to define your initial budget, and then look for a provider that fits that ballpark range.
Look for an experienced provider:
It is important that your outsourcing partner is experienced. Before contacting a partner, you can carry out some research and find out their previous work experience. You can also learn a lot during the interview with them.
Explain clearly what you want:
It is essential that your outsourcing partner understands what you want exactly. Explain what you need them to do, and how it should be done. Specific goals, schedules, and roles must be defined for your outsourcing partner.
Look for excellent communication:
Good communication is absolutely essential for successful IT outsourcing. A good outsourcing company must be efficient at communicating and keeping you constantly up to date about progress and challenges. They must also be excellent at meeting deadlines.
Ask for previous projects and references:
Ask for work samples and references. This way you can be assured that you are working with the right person. They should also be able to explain how they accomplished previous results, so you can be sure of your decision.
How To Get Started With IT Outsourcing
The best way to start an IT outsourcing project is to look at your current staff, and try to determine which additional role(s) would deliver the greatest benefits. Set up a list of skills and roles that will help your business the most, and then start looking for the best providers who can provide those skills.
You should also:
- Set priorities for the roles you want to outsource
- Set up a detailed schedule for when and how you want to outsource these roles
- Calculate the cost savings you can achieve by outsourcing
- Calculate the time saving you can achieve by outsourcing
- Start interviewing IT outsourcing providers to fill the roles you have selected
The Advantages Of Choosing Yempo As Your Partner For IT Outsourcing
Yempo – “Your Employees Offshore” – is a western-owned outsourcing company, providing flexible and low-cost staffing solutions to organizations around the world.
The top advantages that Yempo provides are:
- Flexible staffing solutions:Whether you are looking for full-time or part-time staff, temporary or permanent solutions, we have you covered.
- Low cost, high caliber staff selection:We source the most qualified staff for your company, at a fraction of the normal costs.
- Monthly billing in your currency:Our simple billing system is hassle-free and there is no need to exchange currencies.
We take the time to understand your requirements, source staff with the right skills and present them to you for you to interview. If you proceed, they work under your direction in terms of workload, but we manage all the local day-to-day care, payroll, government compliance, etc.. We essentially “host” your own staff and provide them with the best possible employee experience to ensure loyalty and commitment.
Our staff work in the time zone required by your business and we bill you in your currency. We only hire staff who speak fluent English and have experience working with Western colleagues and clients to ensure an understanding of Western business etiquette and work practices.