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IT Outsourcing: Your Essential Guide in 2023

In today’s always-online world, IT plays a crucial role in every business—regardless of industry. From managing your website and online presence to data management and security, IT functions are essential for your business’s success. However, managing your IT needs in-house can be costly and time-consuming. That’s where IT outsourcing comes in.

By outsourcing your IT functions, you can reduce related costs while leveraging the expertise of professionals. IT outsourcing is the practice of contracting out your IT functions to a third party so you can focus on other areas of the business. It’s also a way to tap the experience of experts in the field so you don’t have to hire full-time IT professionals. Common outsourced IT functions include software development, network infrastructure management, data management, website management, and technical support. IT outsourcing is a popular choice for businesses of all sizes because it allows them to reduce operational costs without sacrificing the integrity of their IT systems and infrastructure.

This article will cover the following topics (click the link to jump to topic):

Why is IT Important in Business?

The digital age has transformed the way businesses operate, arguably for good. It’s now easier than ever to reach out to clients and streamline operations through digital tools and platforms like social media, eCommerce, and online payment systems. Business intelligence (BI) tools and data analytics now help business owners make data-driven decisions that, in turn, help improve the overall customer experience. This also helps companies come up with and design innovative products and services that also meet market demand.

IT has also revolutionized the way people and businesses communicate with one another. The internet and online communication tools like email, chat, and video conferencing software have allowed businesses in all industries communicate with anyone anywhere in the world in real time. Social media has also allowed businesses to stay connected with their clientele and build lasting and meaningful customer relationships. Outsourcing was also made possible through the convenience and possibilities offered by online communication; now businesses from all over the globe can work hand in hand virtually and share vital data with the help of IT systems and digital tools.

Data protection and overall cybersecurity are also vital aspects of every business, even if your business isn’t entirely digital in nature. Today’s digital-first approach to business has increased the importance of cybersecurity, especially with threats like phishing attacks, malware, and ransomware around the corner virtually all the time. These cybersecurity threats pose a significant risk to both personal and professional data. Individuals and organizations should take appropriate measures to protect sensitive information at all times.

The IT industry shows great promise for businesses, especially with the advancements in artificial intelligence (AI), blockchain, and the Internet of Things (IoT)—all of which have the potential to transform various industries and create new opportunities for innovation and growth. As the IT industry continues to evolve, individuals and organizations should stay updated with the latest trends and developments in the field so they don’t miss out on opportunities for their personal and professional growth.

Why Should You Consider Outsourcing IT?

Aside from the obvious reason of cutting down on IT costs, IT outsourcing offers a host of other benefits that will help your business increase its productivity and improve its overall IT infrastructure. Below are the top reasons to outsource your IT team.

It Keeps Teams Focused

While IT functions are a vital part of any business, they can also cause teams to deviate from core tasks and cause delays. Managers often see that teams are pulled into tasks that go beyond their job scope, which adversely affects the business in two ways: it hampers productivity and causes an unreasonable amount of stress to employees. For employees with more technical skills, this is especially true, as they are called on to address IT matters aside from their assigned tasks. Although this may seem convenient at first, it’s ultimately self-defeating because employees can’t focus on their main duties. IT outsourcing helps avoid this issue by employing a third party to outsource your technical requirements, allowing your team to focus on their tasks and meet business goals consistently.

It Complements Your In-house Expertise

Even if you have an IT manager or a few IT people within your organization, it’s always a good idea to have a backup team in case there are unforeseen critical failures that halt operations. An outsourced IT team ensures that you get support whenever you need it. An outsourced IT team also helps in case there are issues that are too technical or can’t be handled by your IT people. An outsourced team isn’t there to replace talent but to complement them, providing the necessary expertise where and when necessary. Consequently, outsourcing opens your business to a range of talent that can contribute to its growth. It also widens your pool to non-local candidates that can help provide innovative solutions to complex problems.

Proactive vs. Reactive

Depending on the nature and size of your business, IT teams are often reactive to issues due to often being overwhelmed with support and maintenance issues. They are also usually on call, so troubleshooting may take up a major part of their workday. This takes away from their time that they can use to focus on larger, forward-thinking projects. If these small issues aren’t addressed, however, they can lead to bigger problems in the long run. Outsourcing ensures that you have people ready to address these issues around the clock. This helps avoid downtime and maximize productivity because employees aren’t bothered by technical issues. An added benefit of outsourced IT teams is a more motivated team and a more robust IT infrastructure.

It Provides Access to the Latest Technologies and Solutions

The IT industry is constantly evolving landscape that offers technological advances in almost blinding speed. New tech doesn’t stay new for long as new ones take their place in mere days or weeks. As such, it can be a challenge to keep up with software updates, new applications, and the latest products. An outsourced IT team allows you to work with people who specialize in this area, ensuring that you always have access to the latest technologies and technical information required for your business to succeed. Aside from having real-time support for everyday issues and critical failures, an outsourced IT team can also provide informed advice regarding your IT needs.

As with any business strategy, IT outsourcing also requires a long-term strategy so you can determine future business goals and adjust IT requirements accordingly. An outsourced IT team isn’t just there to fix computer problems and technical issues; they are there to help you maximize technology to your advantage so business objectives are met on time and within budget.

The Pros and Cons of IT Outsourcing

IT outsourcing can benefit even non-digital businesses because it can help reduce project development expenses and recruit skilled individuals in the shortest possible time. It’s especially useful if you’re looking to fill temporary or seasonal positions, in which case, hiring full-time staff would be impractical. However, as with all business strategies, IT outsourcing also has its disadvantages, and it’s best to be aware of both pros and cons so you can leverage it to help boos t business growth.

The Pros

Easily scalable staff

Building an IT team is hard enough; imagine if you need to add more people or cut down on manpower due to changing business requirements. Fortunately, outsourcing allows you to scale your IT team up or down easily when needed. It allows you to reduce your IT staff once a project is finished or add more people to meet project deadlines. This flexibility provides you greater control over the project and streamlines the process, so you need not worry about hiring and training new employees.

Improved data security and 24/7 availability

Data security is vital for every business, especially those who handle sensitive customer data. IT outsourcing allows a business to complement its current IT team and get access to additional services like data monitoring, backup, and cloud services. Not all businesses have the capacity to invest in cybersecurity infrastructure, which can cause serious issues down the line as a company collects more data. Aside from gaining access to talent from across the globe, you can also use the time difference to your advantage. Because your outsourced IT team is in a different country, you can set a schedule that will cover all your bases and give your business 24/7 security. This also ensures that you and your employees get technical support whenever they need it.

Reduced software development costs

An outsourced IT team is an extension of your own internal team; as such, they can help support your team’s initiatives by filling a skills gap or providing an extra set of skilled hands. Because you’re outsourcing your IT functions, you save on recruitment and training costs and can build teams dedicated to completing specific software development projects. This is significantly quicker and more cost effective than hiring and training full-time staff.

The Cons

Lack of control

This is one of the reasons why companies are hesitant to outsource their IT team. Because you’re entrusting your project to a third party, it can be uncomfortable to share IP’s, process documents, and other proprietary materials. However, as long as all processes are laid out clearly at the onset and goals and expectations are aligned, your project will progress as expected and modifications can be done if necessary.

Security risk

This is a perceived paradox of IT outsourcing; as an organization increases its security by outsourcing IT, relying on a third party also comes with its own disadvantages. If this third party doesn’t have the same or better security standards than you, this could pose a problem since they handle your data either wholly or in part. Outsourcing companies typically have safety and security standards in place and will do what’s necessary to safeguard your data and other assets. Still, it’s best to ensure that the outsourcing company you work with has them, because if they don’t, their cybersecurity issues will be yours, too.

Lower quality of work

This is always an issue when delegating tasks or functions, especially when outsourcing outside of your organization. There are companies that provide great talent and a sound infrastructure, but this all depends on who you partner with and what tasks or functions are assigned to them. This highlights the importance of finding a suitable outsourcing partner and doing your due diligence.

4 Ways IT Outsourcing Can Benefit Your Business

Developing software in-house can drive costs through the roof, not to mention increase turnaround times. This is why companies have looked outside of their organizations—and their countries—to outsources IT talent, regardless of whether they require a developer or IT tech support. Couple this with the other apparent benefits of outsourcing in general, and you have a cost-effective solution that will help increase your productivity.

Below are the main benefits of IT outsourcing for your business.

You can build a dedicated team.

This is essential for large and long-term IT projects. Having a dedicated team means having people that exclusively work for a specific project. They are committed to the project and would be able to adapt to rising demands, ensuring that they deliver the expected results using their expertise and knowledge. Members of this team usually stay for the duration of the project or for as long as their services are required. They are retained as much as possible to avoid the unnecessary costs of hiring replacements. As such, members of the dedicated team are screened and assessed rigorously.

It gives you access to the latest technology and related skills.

An outsourced IT team shouldn’t be considered as an “outside team” per se, but an extension of your own internal IT team. They can be used to complement the skills and technology you already have, which will help your business grow in the long run.

An outsourced team is agile.

An outsourced team embraces the agile methodology—that is, a workflow that encourages iterative development, frequent deliverables, and constant feedback. This is an adaptive approach that allows for changes mid-project and ensures that the final product meets requirements. The flexibility of an outsourced team extends to its scalability. IT outsourcing empowers companies to scale teams up and down as needed, which means you only pay for the services you actually need at any given time.

Transform fixed costs into variable costs.

While outsourcing may seem like an additional expense, consider the actual costs of hiring full-time staff against outsourced teams. When you outsource your IT team, candidate selection, compensation, equipment, infrastructure, and other backend functions are shouldered by the outsourcing company. Fixed costs become variable costs, which mean that you can plan your budget and resource allocation based on your current needs. As you upscale or downscale your team, the costs also go up or down with it.

How to Successfully Outsource Your IT Team

There was a time when IT outsourcing was simply an option for businesses looking to expand their in-house IT team. Today, it’s a necessity for most businesses, with 50% of executives in the US stating talent acquisition as one of the top internal challenges in meeting an organization’s strategic priorities. Because of this, 81% of executives turn to outsourcing companies to provide cybersecurity and IT capabilities.

Ensuring that your IT outsourcing venture is successful is key to unleashing the true potential of an outsourced IT team. Below are a few tips you can follow.

Recognize your strengths and weaknesses.

Many businesses mistakenly believe IT outsourcing to be a plug-and-play solution; all you must do is find an outsourcing company and leave everything to them. While outsourcing service providers may be adept at what they do, they should know the ins and outs of your business if they are to provide good service. Before talking to an outsourcing company, make an assessment of your current IT assets and manpower to determine what your IT deficiencies are. Before doing your due diligence on prospective outsourcing partners, first, do your due diligence upon your own business by assessing your needs and the IT functions you wish to outsource.

Work with decision-makers.

Assess the technical skills and experience of your internal team to determine where you may have difficulties making decisions during a project. The buck should stop with you, but you should have an outsourcing partner that can and will make important decisions when needed, especially if they’re time sensitive. Working with decision-makers and problem-solvers will help you see things from a different perspective. Be sure to keep an open mind to enhance your IT competencies and help promote the growth of your IT team.

Equip yourself with the right tools.

Building a relationship with and ensuring that your outsourcing partner performs to the best of their ability entails providing the support it needs. First and foremost, you should have the right tools that will support communication and collaboration between your employees and your outsourcing partner. You must choose the tools that will help both parties keep communications clear and organized despite changes and unforeseen circumstances to avoid delays and rework. Aside from communication tools, you should also prepare whatever tools are needed to support the completion of your project within the agreed upon deadline and budget.

Prepare for change.

IT outsourcing will bring some changes that can disrupt your organizational workflow and culture, so it’s vital that your organization is prepared for it. Without proper change management, both the implementation of new processes and execution of other tasks for the duration of the project will be negatively affected. By having a point person responsible for mitigating the disruption caused by the change, you ensure that both your employees and your outsourcing partner work productively and with minimum interruption.

Building IT Outsourcing Relationships Instead of Infrastructures

For a successful IT outsourcing venture, it’s vital that you ensure constant communication all throughout the duration of the project. It’s a good idea to look at your own processes because they can sometimes be the cause of the problem, and it’s better to discover and address them sooner rather than later.

Building long-term relationships means identifying the root cause of problems, being accountable, and working together to find the appropriate solutions. While it’s important to make the outsourcing company understand its role in the outsourcing relationship, you should also understand your own. Be open to change and help your outsourcing partner determine and overcome roadblocks so you reach your common goal.

Schedule your free consultation today to see how outsourcing can address your IT needs and save up to 70% in operational costs. See how building a team in the Philippines can complement your IT skills and promote the overall growth of your organization.

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