IT outsourcing - advantages and disadvantages

More and more companies that care about cost optimization reach for outsourcing. Outsourcing some processes to an external company saves money, improves the efficiency and quality of IT services, and avoids significant risks. How does IT outsourcing work, and what are its advantages and disadvantages?

In short, IT outsourcing consists of delegating some tasks to an external company that specializes in a given type of service and process. Organizations decide to take this step for a variety of reasons. The most common issues are inadequate resources, IT infrastructure, and the desire to avoid high recruitment costs. Outsourcing can cover various activities, such as server administration, computer network, troubleshooting, or hardware service. Outsourcing problematic tasks to the right partner usually makes them faster, cheaper, and more efficient.

It is worth noting, however, that cooperation with an outsourcer is not based on ad hoc orders but is long-term. Companies that use outsourcing usually decide to delegate selected processes permanently or for a predetermined, but always long, period. The service provider is responsible for ensuring IT security, hiring and training employees, and purchasing the necessary equipment in this arrangement.

There are various models and methods of classifying IT outsourcing—the advantages and disadvantages also result from their appropriate adaptation to the organization. However, the choice of the right solution always depends on a given company’s individual needs: the type and number of processes it wants to delegate, its human and material resources, and the goals it wants to achieve in this way.

IT outsourcing can be divided into full and selective outsourcing. In the first case, the IT infrastructure and its support are transferred to the outsourcer’s headquarters. In the second (most common) process, specific processes are selected for outsourcing. Usually, these are not key tasks for the company’s functioning and development, but those that are performed internally require a lot of time and resources and can easily be performed by someone else.

The second way of classification is the division into employee outsourcing and body leasing. In the first case, outsourcing builds the client’s team at its headquarters. Second, the company hires specialists with specific competencies, from outsourcing to project cooperation. Thanks to this solution, the organization does not have to carry out costly recruitment and then terminate the contract with the employee after the end of the project. In this way, it also reduces the risk of employing a person with mismatched competencies, which is often the case in companies with less technological experience. All formalities remain then on the side of the posting company, and employment in this model gives excellent flexibility.

The location of the company’s headquarters is also essential in outsourcing. This is how we distinguish between nearshoring and offshoring. Nearshoring consists of delegating tasks to a place relatively close to the client’s seat (e.g., another European country). In the case of offshoring, the outsourcer’s headquarters are usually located in a remote place, such as India or the Philippines. This activity allows companies to save significantly, although the geographical and language barrier carries some risks.

If you are unsure which outsourcing model is right for you, contact us. As an experienced outsourcing company, we will analyze your needs and help you choose the right solutions.

It is difficult to determine the cost of IT outsourcing—the advantages and disadvantages also apply to costs and how to choose them. They depend on many factors, such as the selected model and scope of cooperation, type of service, equipment needed for its implementation, and the number of employees. Typically, hourly or part-time billing is used. Sometimes, specific tasks and services are also priced. All financial and technical arrangements are then written down as an SLA (Service Level Agreement).

However, it must not be forgotten that cost optimisation is the most common reason for outsourcing. Typically, delegating tasks is much cheaper than recruiting, purchasing hardware and software, and organizing employee training independently. Hiring a team involves more than just payroll costs. It is also necessary to provide a place and tools for work, a company phone, a laptop, pay-related allowances, and the organization of replacement in the event of an employee’s temporary absence. Moreover, team members’ skills and the IT infrastructure require constant updating and continuous improvement of efficiency, which usually consumes a significant part of the budget.

Building an in-house IT team is, therefore, very costly, requires a lot of competence, and thus – is also risky. Companies offering IT outsourcing already have the necessary experience in recruiting, running, and optimizing processes and have built solid business relationships with technology partners. Often, after careful calculation, it turns out that you can get much better results thanks to outsourcing. Tasks are then performed faster, cheaper, and more efficiently, and the risk associated with unsuccessful recruitment or purchasing the wrong equipment is reduced to a minimum.

However, for IT outsourcing to work efficiently and bring measurable benefits, it is crucial to select a partner carefully. It should specialize in a particular range of services or industries you operate. If you still have not decided to cooperate with a specific outsourcer, please get in touch with us. We will help you analyze your needs and suggest which outsourcing model to choose and which company to cooperate with.

 

The above article, “IT Outsourcing—advantages and disadvantages,” does not fully cover the subject, but we believe it gave you an idea of how to prepare well for using this service in your organization.

 

Do you still hesitate if the build-operate-transfer service is suitable for your company?
Write to Katarzyna Bodziony (sales@infolet.pl). I’ll help you make the best decision for your business!