IT has become an increasingly important aspect of business over the past few decades. It has revolutionized the way we do even the most fundamental of tasks. That said, it is still a relatively recent change. There are still people in the workforce today who can recall times when computers were practically non-existent in most industries. And, like all significant changes to long-established norms, the transition to a predominantly IT-reliant sector hasn’t always been smooth. It makes sense that there would be reservations about making even more drastic changes to how we do business. Such reservations might include IT outsourcing services.
The march of progress is as relentless as ever, and IT outsourcing for software development is one of how that progress is manifesting. It allows businesses to partner with companies anywhere globally to deliver better IT services more efficiently than they would with traditional methods.
But what does outsourcing IT mean in practical terms, and what are the benefits of doing it?
What is IT Outsourcing?
Like other forms of outsourcing, this is the practice of using external providers to handle functions that would have been handled in-house. These functions include software development, infrastructure solutions, technical support, and other aspects of IT. Growing interconnectivity and the proliferation of software as a service (SaaS) have made it possible to outsource more and more IT functions.
In doing so, businesses free up money and resources for their core businesses and often gain better IT services in the process. The services that are outsourced can be both inward and outward-facing. For example, a company could outsource its supply chain management solution, an inward-facing IT service. They can also outsource their online sales platform, an outward-facing IT service. These services are often interconnected (such as supply chain management and item tracking for customers), making the argument for outsourcing multiple IT services stronger.
What Are the Advantages of Outsourcing IT?
The first step in accepting outsourcing as a viable solution is understanding the advantages. Fortunately, there are many such advantages to list;
Time and Resource Savings
There is no getting around the fact that providing any service requires time and resources, and both supplies are finite. For the vast majority of organizations that are not in the business of providing IT services, the benefits of this part of their operation are hard to quantify since there are no profits to measure.
By outsourcing IT services, the time and resources that would have been tied up in those services can be freed up for other things.
Reduced Expenses
Thanks to the economies of scale concept, outsourcing your IT services will usually result in cost savings. If, as a business, you look at IT as a service that you provide, you essentially have one customer; yourself. In almost all iterations of manufacturing and service providing, it is cheaper to supply many customers than a small number. This is not an option for companies who do not provide IT services, as it would require a drastic shift in what they do.
Companies that provide outsourced IT services, on the other hand, can have many clients. This allows them to scale up their operation and offer the same services at an optimal cost. The net result of this situation is that companies providing their own IT services in the past can significantly reduce the cost of those services by paying a third party to do it.
Increased Ability to Upscale Quickly
Like many aspects of business, having extra IT capacity is a mixed blessing. On the one hand, you will be ready for increased trade, but on the other hand, you are paying for that extra capacity regardless of whether the increase in business comes.
Companies that offer outsourced IT services can afford to be more agile. They can provide bespoke capacity to suit a client’s needs and ramp up that capacity as and when they need it. The result of this service is that a company that moves to outsource its IT can upscale (or downscale) almost instantly.
Access to a Global Talent Pool
Running IT services the traditional way would typically limit a business to employing people who are local, which dramatically reduces the potential talent they have to draw on. With outsourced IT services and the prevalence of software as a service, a business can take advantage of a global pool of talent because they are not tied to any one physical location.
Uninterrupted Workflow
Companies that offer IT services on a global market are, by necessity, working around the clock because they will rarely be in the same timezone as their clients. The advantage for a business here is that they do not need to worry about scheduling when getting technical support or dealing with other IT matters. The days of encountering IT problems late at night or on the weekend and waiting until someone from the IT department arrives are over.
Types of Outsourcing
There are four main types of outsourcing, each with its benefits. These are;
Offshoring
As the name suggests, offshoring involves outsourcing your IT to a distant location. This is often to take advantage of more affordable labor costs, different time zones, or the talent pool in that location.
Nearshoring
Nearshoring is the process of outsourcing to a company that is a little closer to home. Typically, this is done to get some of the benefits of offshoring, but with better communications and less of a cultural divide.
Onshoring
Onshoring is a type of outsourcing that uses a company within the same national borders. The advantages of this are cost and resource savings, and can also refer to employees that work from home.
Multisourcing
Multsourcing involves outsourcing IT services to multiple vendors. One of the main reasons to take this approach is to diversify the risk of having all your services provided by one vendor.
Final Thoughts
We are already at a stage where outsourcing IT is more cost-effective than in-house solutions. This state of affairs will likely continue, with the benefits improving as the technologies available become more reliable and capable.
