IT outsourcing - advantages and disadvantages
More and more companies that care about cost optimization reach for outsourcing. Outsourcing some processes to an external company not only allows you to save money but also to improve the efficiency and quality of IT services and avoid significant risks. How does IT outsourcing work and what are its advantages and disadvantages?
How does IT outsourcing work?
In short, IT outsourcing consists in 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 is the lack of adequate resources and own 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. In this arrangement, the service provider is responsible for ensuring IT security, hiring and training employees, and purchasing the necessary equipment.
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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 the individual needs of a given company: 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 entire 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 functioning and development of the company, 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. In the second, the company hires specialists with specific competencies from outsourcing to cooperate on a specific project. 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 great flexibility.
In the case of outsourcing, the location of the company’s headquarters is also important. This is how we distinguish between nearshoring and offshoring. Nearshoring consists in 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 type of activity allows companies to make significant savings, although the geographical and language barrier carries some risks.
If you are not sure which outsourcing model is right for you, you can contact us. As an experienced outsourcing company, we will analyze your needs and help you choose the right solutions.
How much does IT outsourcing cost?
It is difficult to determine how much IT outsourcing costs – the advantages and disadvantages also apply to costs and the ways of determining 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 in the form of an SLA (Service Level Agreement).
However, it must not be forgotten that the most common reason for outsourcing is cost optimization. Typically, delegating tasks is much cheaper than conducting recruitment, purchasing hardware and software, and organizing training for employees on your own. Hiring a team involves more than just payroll costs. It is also the need 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 the temporary absence of an employee. Moreover, both the skills of team members 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 – 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 the purchase of the wrong equipment is reduced to a minimum.
However, for IT outsourcing to work efficiently and bring measurable benefits, it is important to carefully select a partner. It should specialize in a particular range of services or industries in which you operate. If you still have not decided to cooperate with a specific outsourcer, please contact us. We will help you analyze your needs, and suggest which outsourcing model you should choose and what type of company to cooperate with.
The above article “IT Outsourcing – advantages and disadvantages” does not fully cover the subject, but we believe that 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?
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