What Is IT Outsourcing and What Benefits Does It Provide?

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I’m sure you’ve heard of IT outsourcing, but what does it actually mean? What are all the risks and all the benefits?

One thing is for sure, you definitely need the right strategy ahead of time before handing over any of your IT services.

Outsourcing has the potential to drive your business goals well beyond what you thought is possible, but it all depends on who you choose to work with.

The number one reason why IT outsourcing fails is because what you expect to be delivered is often far more watered down than what was promised.

We’ve worked with a lot of businesses over the years and almost all have had incredibly bad experiences with previous suppliers.

Be it customer service, or lack of pro-activeness, the experience your business will have with an outsourced IT service is wholly dependent on the strategy you use from the very beginning.

Want to see the strategy we highly recommend to our own clients?

If so, click here to watch our short video that goes through a step-by-step strategy you can use to reduce the amount of IT support problems you may have by 50% or more with very little effort (you can do this yourself whether you choose to work with us or not)

Finished watching the video?

Great!

Now that you’ve seen the strategy, let’s dig into the details of what IT outsourcing is and why it may apply to your business.

What is outsourcing exactly?

Any business today relies on technology to perform a large amount of its functionality.

Whether you’re a small business or large organisation, the costs for having full time IT staff members dedicated to providing IT support can be both expensive and a nightmare to manage with all the HR processes required.

It’s for this very reason that businesses contract third party suppliers to fulfill various IT functions, including projects, data migrations, disaster recovery and full scope infrastructure and help desk services for staff members.

Third parties include IT freelancers and stand-alone professionals, consulting firms, fully managed service providers, SME specialists and so on.

IT outsourcing statistics and expectations

There are, of course, a lot of benefits to an outsourced service when properly selected. It all boils down to expectations versus what is actually delivered as an end result.

The below outsourcing statistics is from a survey we sent out to our clients to gauge what their experience had been with previous suppliers, and as you can see – expectations are often misaligned:

Overly enthusiastic sales staff often paint a much prettier picture of what can be achieved.

If you’ve watched our quick training video mentioned earlier in this article, it’s clear that any IT outsourcing provider you use should be a benefit to your business beyond basic expectations.

Here are some of the qualities that are important:

The willingness and drive to keep up with technology

In the IT world, the menu is continually changing and it takes a lot of effort to adapt new technology and software as part of a service offering.

The emphasis on re-training is ultra important, as is having a dedicated research & development (R&D) process to fully test how new beneficial technology can and should be implemented.

Tailored solutions rather than one-size-fits-all

Every company aims to grow, either in size or through various other metrics that are important to delivering their products and services.

Your business goals and IT requirements will inevitably change with the market space you’re in, and it may be more frequent depending on the industry.

Third party outsourced IT providers need to maintain an adaptable service. If an outsourcing provider is inflexible in how they operate, or if they are not re-training often and keeping up with technology, your experience will be exceptionally poor.

IT outsourcing should reduce costs while increasing quality

The primary advantage of why a business would choose to outsource their IT support is the costs of hiring full time staff to perform the same role.

Here is a rough example of what it costs to operate IT services internally versus using an outsourced IT company.

A single in-house IT staff member can comfortably support around 40 – 60 users, whereas an outsourced IT company could support double as many users at half the cost:

In-House vs Outsourced IT Costs

Outsourcing to companies who specialise in IT also means that you have access to a larger pool of talent without any additional cost. Equally, the expertise that is on offer should be focused on delivering technology that reduces your business costs from all angles.

This doesn’t mean paying rock-bottom fees for IT outsourcing itself, reducing costs should come as a result of the experience an outsourcing company brings to the table i.e. recommending and implementing alternative software tools, services or processes which reduce costs overall.

The top 5 benefits of IT outsourcing

Higher levels of productivity

IT outsourcing allows business owners and teams to focus on their specific goals rather than having to deal with the inner workings of IT and support.

If an outsourced IT company knows what they are doing, there should be almost no input required and therefore, no productivity impact to staff members as they continue to focus on their work.

Access to exceptional talent

Reputable IT companies are specialists in their fields with dedicated experience in every nuance of technology, from high-end infrastructure and security to software and data management.

In-house deployments are usually only made up of a handful of support staff who have general experience. Outsourcing offers far more specialist resources and a richer experience in multiple industries.

Reduced costs and overheads

One of the biggest advantages to outsourcing is the reduction in overall costs.

Organisations moving from in-house to outsourced gain the largest cost reduction, but every business should benefit from outsourcing regardless of size. It all depends on the IT company involved, and their long-term strategy experience.

Better Overall IT Management

Infrastructure, software integration and IT in general is a complex subject, and it’s hard to manage. When IT operations are performing badly, a lot of time is wasted which directly impacts staff morale, productivity, and overall costs.

Outsourcing all IT operations will ensure better overall IT management, however, it shouldn’t be a ‘set and forget’ solution for business owners.

Accountability needs to be checked, and performance metrics do need measuring to make sure that the services you’ve been promised are actually being delivered.

Outsourcing Is Less Risky

Companies who take on the responsibility of managing their own IT can be at a far greater risk if the services and solutions they choose are the wrong fit for their business.

Outsourcing to the right service providers who know what platforms work together and who are trained specifically to deal with both low level help desk support and high level infrastructure removes all the risk of investing in the wrong solutions.

The 5 Different Types of IT outsourcing

Offshore Outsourcing

Where the IT company is located in a different country and generally operates at a far lower cost than what can be found locally.

Nearshore Outsourcing

Where an IT company is located in a bordering country to your own, making it easier to communicate and travel back and forth to supply various services.

Onshore/Domestic Outsourcing

Where an IT company is located within your country or locality to provide onsite or remote IT services. This is one of the more popular options for companies who need a hands-on approach.

Cloud Outsourcing

Where an IT service delivers specific cloud solutions i.e. SaaS (software as a service), IaaS (infrastructure as a service), etc. Location is less relevant for these services, however support availability and time zones can be important.

Managed Service Providers (MSP)

Where an IT company provides all aspects of your infrastructure, including telephony, leased lines, internet, networking, etc along with all help desk support.

This is a popular option for companies who want all IT functions covered under one contract.

What outsourcing services exist?

Some outsourced companies only specialise in one or two areas, other companies (like ourselves) perform multiple functions under the same roof.

Here are some of the more common fields which are most often outsourced:

  • App and Software Development
  • Web Development and Hosting
  • Application support and management
  • IT, technical and helpdesk support
  • Customer Service
  • Database development and management
  • IP telephones and communications
  • Infrastructure design and management
  • Disaster recovery and business continuity
  • Data centre services and data storage
  • Email hosting and replication
  • Cybersecurity testing and management

Conclusion

Outsourcing can be a powerful asset to any business when combined with the right strategy, and it’s certainly growing in popularity each year with companies across the world. As IT starts to get smarter, the idea is to turn what is an essential cost into something that actually drives profits.

IT is often considered part of doing business, like having an office and paying for utilities. But, it should be doing much more than simply keeping the engine running. It can be used to completely change the way a business operates so that teams can achieve a lot more without doing more work.

Should your business outsource it’s IT requirements? Definitely. Just make sure you have an intelligent and diligent strategy to get the best results.

I’d love to hear your thoughts. Do you currently outsource your business services? What has been your biggest challenge? Let me know in the comments below!

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