Understanding IT Outsourcing

As the owner of a small or big enterprise, the thought of outsourcing your information technology needs and services must have crossed your mind at some point of time. With that thought there might have been a number of questions that must have popped up in front of you as well.

What is exactly IT outsourcing, what are its benefits, its fall backs, how to avail such services, what is the cost implication, is it risky? And many more questions and queries are bound to be raised when you are outsourcing an important function of your business.

Understanding IT Outsourcing

While the practice of outsourcing is not new, there are multiple purposes, reasons, risks and rewards associated with it. It is better to first understand the process and its pros and cons before you take the plunge of outsourcing your IT department to a firm.

Let us first begin with understanding what is the meaning of outsourcing. Outsourcing is the process of hiring another organisation to manage certain business activities for you. It means giving away some of your business tasks to another business entity that can easily manage the task for you making life easier for you and your business. Companies opt to outsource mainly to gain services and skills they would usually find hard to develop in-house, because of either cost or human-resource restrictions, or both.

IT outsourcing deals with particularly outsourcing or subcontracting responsibility for the information technology function to an expert in the field. The services can range from IT infrastructure to software development, maintenance and support.

Reasons of IT outsourcing services

The common reasons for outsourcing IT function are:

  • Reducing IT costs: You do not have to invest in setting up the necessary infrastructure for latest digital technology, you can save on your capital funds.
  • Access to better IT skills: You can take advantage of world-class IT skills of a big outsourcing company which has many expert minds working dedicatedly in this field.
  • Focus on core business: The experience of management professionals in your organisation can be used for broader and more strategic issues within the company.

Risks of IT outsourcing service

The potential risks of outsourcing IT function include:

  • A loss of control over a service: You can have a better control over an in-house team than an external organisation. But this can be avoided if proper processes, reporting structures and regular audits are conducted to enhance transparency between the two parties.
  • Cultural mismatch: There are chances that the company you are associating with has a completely different culture and office environment. This may lead to some friction among your team and the outsourced company employees. However, the most important thing to consider here is ethics and integrity of operations. We can all have cultural differences but if we stick to ethics we are getting our fundamentals of doing the business right.
  • Additional responsibility to handle a service provider: Despite of outsourcing your IT function you still have to perform a very big task – that of managing your service provider. It is no mean task. You have to create an open channel of communication between the service provider and yourself. Also transparency, regular monitoring, weekly updates, office visits etc are some of the additional responsibilities that come as part of outsourcing.

How to plan your IT outsourcing?

Planning is the foremost important thing to ensure successful execution of IT outsourcing.

  • Ensure you have a robust business case along with other compelling reasons to outsource. Prepare a detailed business plan and strategy to show it to the senior management for approval.
  • Have an in-depth understanding of your existing IT operation. Understand the purpose of contracting external IT services and its repercussions on your business.
  • Evaluate the cost and the pricing model well to make sure it is value for money for your organisation.
  • Choose your partner carefully. It is a longer term engagement and hence planning is essential before taking the plunge.
  • Create robust third party contracts and understand the pros and cons of working with a service provider.

IT outsourcing can be done for various IT services including software as a service (SaaS), Platform as a service (PaaS), cloud-enabled outsourcing, etc. These services enable companies to design new business strategies and stay ahead in the competitive market.

At Collabera we offer global best practices and latest technology solutions to drive competitive advantage in the fast emerging digital channel. Our thought leadership and operational excellence enable us to consistently deliver high business impact for our clients. Our understanding of each client is unique and our services are completely customisable.

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