It is hard to imagine a world without outsourcing. This business practice is everywhere around us. From small businesses to Fortune 100 companies, outsourcing plays a vital part in business operations.
Undoubtedly, this service delivery model has changed the way businesses work. In 2019, the global outsourcing market amounted to $92.5 billion and remains one of the fastest-growing industries.
Businesses outsource many of their processes. IT services are one of the business functions commonly contracted to third-party providers. In fact, the global spending on IT services is estimated to reach around $1.1 trillion this year as companies find it harder to fill in vacant IT positions. Outsourcing enables companies to concentrate their resources and time on core business processes, at the same time, meet their IT needs.
While outsourcing seems the most prudent decision, companies must understand that it also comes with unique advantages and disadvantages. By knowing its pros and cons, you come up with a more prudent decision of whether to outsource IT services or not.
Pros of Outsourcing IT Services
Allow the Business to Focus on Core Processes
In the majority of companies, the IT aspect of the business is a supportive process that can be delegated to a third-party provider. Outsourcing IT services unburdens you and your staff from all the headaches associated with your business IT needs. Instead of spending your day working on problematic software or hardware devices, you can use this time to improve core business processes – a more productive way to use your time. This is particularly beneficial for startups that need to concentrate on vital aspects of the business.
According to an IT specialist at Firewall Technical, this is the topmost reason why many companies outsource. Contracting IT needs to a third-party provider can help cut the fixed costs associated with maintaining in-house IT staff, such as providing employee benefits and expensive training.
Outsourcing also allows businesses to hire on an as-need or per-project basis. This means, you only pay the services during the duration of the project. Once it is done, you can cut the service or renegotiate the terms if needed. As a result, operational expenses can be significantly minimized.
Better Security and Technology
IT outsource providers specialize in a specific area of IT. Their IT teams have undergone the necessary training and experience to work on such projects. They also invest heavily in the latest software and technologies for this purpose. Contractors also guarantee that the highest security standards are employed in their work.
Gain Greater IT Expertise
If your IT team lacks the level of expertise or capacity to handle your IT needs, you can benefit from a third-party provider. Outsourcing allows organizations to tap a pool of experienced IT professionals. Instead of being restricted to a local pool of IT professionals, IT service providers expand your manpower options and provide you with the needed level of expertise. You don’t have to go through the arduous recruitment and hiring process to find the best professionals.
Cons of Outsourcing IT Services
Loss of Control
By outsourcing IT services, you have less control over IT functions in your business. Although you can provide general direction, you don’t have direct control over the third-party providers. They operate on their own, so you cannot directly manage or supervise the work of the on-site team. If you have any concerns, you will have to course them through designated channels.
When not properly vetted, you might end up working with a poor IT provider that might fail to meet your expectations. Just like any other industry, the IT outsourcing industry has its share of bad apples. Some have experienced working with poor, unprofessional, or downright bogus providers. This makes it crucial to do your homework and perform thorough due diligence when choosing a provider. Also, it is important to layout your expectations and clearly discuss them to your provider. This helps ensure that your goals, budgetary limitations, timeline, and quality standards are all met.
Trouble with Communication
Outsourcing IT services adds an unnecessary barrier in the communication lines. Instead of sending the message directly to the IT team, the message would have to pass through the agreed communication channel. This won’t be a problem if there is a reliable and competent point of contact. However, if the lines of communication are limited or unreliable, this can be very frustrating and problematic. To avoid this problem, you need to be specific about the method of communication, how in-depth, and how frequent. Alternative lines of communication should also be identified should there be a problem.
Risk of Exposing Classified Data
Outsourcing IT services might expose critical data to outsiders. Although contractors bind themselves to confidentiality and non-disclosure clause, there is always the risk that confidential company information might leak. This makes it important to choose a reputable provider with a proven track record. Furthermore, businesses should consider limiting their access exclusively to non-classified data, at the same time, fortifying internal data security.
Although outsourcing is generally cost-effective, there are some hidden costs that might slip into the contract. Carefully rid the fine print and know where your penny goes before finally signing a contract.
Lack of Focus on Company Vision and Goals
Contractors are only focused on implementing the tasks at hand. They do not align themselves with your company’s vision or goals. As a result, they may lack customer focus. What’s important to them is to complete their daily objective and nothing more. If your organization is building a customer-centric culture, this would surely run contrary to your company’s vision.
Considering all these advantages and disadvantages of outsourcing IT services, it is advisable to thoroughly study your decision before actually contracting it to a third-party provider.