Today’s business world is characterized by cut-throat competition. With businesses trying to get ahead of each other for greater market share, there is one strategy that has gained significant traction over time: IT outsourcing.
Did you know that 92% of G2000 companies outsource their IT needs? With modern technology developing at a rapid pace, most companies choose IT outsourcing as a strategic step to support continuous growth.
But what is IT outsourcing? How does it work? Why are businesses turning it into the ultimate solution? Let’s learn more about this!
What is IT Outsourcing?
IT outsourcing is when companies refer to hiring a third-party company to handle most of their IT needs. These IT needs include custom software development, software testing, cloud computing, mobile and web development, maintenance, support, and so on.
Types of IT Outsourcing
- Offshore Outsourcing
This involves companies outsourcing their IT functions to different companies in a foreign country. The main motive behind this is cost-effectiveness. A lot of third-world countries have several IT companies working for other first-world countries. Due to labor costs being lower, they get their IT tasks done at a much lower rate.
- Nearshore Outsourcing
This is when IT-related work is outsourced to a company from a neighboring country. The idea behind this is that it would be easier to travel in case the need arises. Say you are based in the United States and you outsource IT services to Mexico. This would make traveling very easy.
- Onshore or Domestic Outsourcing
This refers to an IT outsourcing arrangement where you outsource IT services within your own country. This helps fight language barriers and also time zone differences, making communication a whole lot easier.
- Cloud Computing Based Outsourcing
This type of IT outsourcing is when you purchase a certain IT-related service online. It includes Platform-as-a-Service, Infrastructure-as-a-Service, and Software-as-a-Service models.
- Managed Service Outsourcing
This is the process of drafting an outsourcing agreement for network administration tasks with an outside managed service provider (MSP). Facilities like virtual private networks (VPNs) and firewalls are provided by the managed IT service provider.
IT Outsourcing Benefits
IT outsourcing has a lot of benefits, which is largely why most companies tend to resort to it. Here are a few of the key benefits of IT outsourcing:
- Cost Efficiency
The most massive advantage of IT outsourcing is that companies get to reduce their operational costs. When they outsource their entire IT department, it allows them to surpass very heavy costs that they would otherwise have to partake in, which include investments in infrastructure and technology. So, outsourcing essentially allows for more predictable budgeting.
- Access to Specialized Expertise
IT outsourcing firms frequently hire highly qualified experts with a wide range of technology and domain knowledge. By collaborating with these suppliers, companies can gain access to specialized expertise and knowledge that might not be available internally. Businesses can access a large talent pool through outsourcing in a variety of fields, including data analytics, cloud computing, cybersecurity, and software development.
- Focus on Core Competencies
When companies resort to IT outsourcing, they get more time on hand to focus on their core activities, which allows them to maintain a certain level of competency, which is highly crucial. With more time on hand to focus on what they like to do, they can make their business even more successful. Say if a company isn’t specialized in custom software development, then a smarter idea would be to outsource that so that they can use their talent pool more smartly.
- Ability to Provide Round-the-Clock Service
Not all of your clients operate in the same time zone as you do. So if you choose to go with IT outsourcing, then you can work outside of your working hours. Your service provider can give you a committed workforce that is available around the clock through outsourcing. The service provider handles hiring personnel from around the globe, so you won’t have to bother about it. Your IT assistance can be available around the clock in this way!
- Added Flexibility
IT outsourcing allows you to be very flexible in your approach. You can alter your approach as and when need be, depending on how you need to work your way through. So, for example, if you run a restaurant and you want someone to help you develop your website for you, then it doesn’t make sense to hire someone full-time to do the job for you. You can just hire someone part-time or on a freelance basis to do what works best for you. This gives you the added flexibility of hiring and paying for the services when you need them.
- Improves Business Focus
When you outsource your IT services, you can focus on your primary business, which helps you improve with new frameworks, and also helps you become more efficient. Most small business owners are not IT experts. IT outsourcing allows them to focus on what they do best, while they focus on their core activities.
With so many advantages to IT outsourcing, you can make use of it in the way that you work.
IT Outsourcing Guide: How to Do It
IT outsourcing is a very powerful tool that provides you with business support. With the right approach, you can get great benefits. Many ask, how can you use IT outsourcing services? Here is a step-by-step guide to make things so much easier for you!
Step 1: Define Your Goals
The foremost thing is to know where you are headed with your business. When you have your goals clear in front of you, it allows you to get the support that you need. So for example, if you plan to expand and you need expert support with IT in that, then you can only get the right team to work with you when you are clear about this in your mind and plans first.
Step 2: Research the Market
The next step is to research the market so that you can find out more about the different companies that operate in the arena. You can do a background check on them to see their experience and competencies. It is also a wise idea to pay attention to customer reviews so that you ideally understand more about IT outsourcing needs.
Step 3: Make Clear Agreements
Once you have decided on the company that you want to go with, make a clear agreement with them that has all the details about the scope of work, timelines of execution, financials, and so on.
Step 4: Monitor and Evaluate
From time to time, keep monitoring how well the IT outsourcing company is performing for you. Think about the shortcomings and how you can improve over time.
Step 5: Ensure Confidentiality
This is an agreement that you have with your IT outsourcing partner. So ensure confidentiality and security. Make sure to sign a non-disclosure agreement, so that you can ensure that things work well for you.
Step 6: Manage Risks
Keep analyzing any potential risks that you think may arise from this. Then you can develop an action plan to manage those risks. Remember that you have to be prepared for any unforeseen situations with your outsourcing partner.
Step 7: Learn from Mistakes
With IT outsourcing, you cannot expect things to work perfectly for you from day one. So, try to learn from your mistakes so that you can improve things over time. When you keep updating your knowledge of new technologies, it will help you move ahead.
Way Forward
Now that you understand how IT outsourcing can help you stay ahead of the curve, what are your thoughts about it? Are you ready to maximize the benefits of IT outsourcing and simplify your company’s operations? Check out the advantages and opportunities of IT outsourcing right now, whether you’re an established business searching for cost-effective solutions or a startup trying to grow.
Get in touch with Tplex right now to find out how our specialized outsourcing services can help your company grow, innovate, and operate more efficiently. Allow technology to not be an obstacle in your way; together, let’s achieve achievement!
