Almost every small business owner, at one time or another considered outsourcing some parts of their business. The benefits of outsourcing seem to be obvious, encouraged by positive reviews from experts from various sectors whom outsourcing helped to reduce business costs of IT operations, accounting, marketing or human resources. You can even draw a conclusion that you can run an entire company without even hiring one employee.
Is there a lower limit for outsourcing? Why there are still companies that have not decided to take advantage of outsourcing? Can the choice of such solution have any implications for your business?
Based on an example of outsourcing for 3 years, we will discuss motives for choosing this solution as well as risks and benefits, especially for IT companies. As a bonus, we’ll give you some tips to help you maintain a successful relationship with your IT service provider (whether they are hired full-time or contractors).
According to the Outsourcing Institute, Index2000, there are many reasons why companies choose outsourcing. Here are the main ones:
Reducing and Controlling Operational Costs
By opting for IT outsourcing you can eliminate the costs associated with hiring an employee (supervision, training, health insurance, taxes, retirement plans). You can focus on the key competences of your business. It is believed that it is not worthwhile to enter into new issues when a specialized company can do it for us, meanwhile we can take care of the operations that we know a lot about.
Access to Proven Technologies
You can gain a lot more when you outsource IT services to a specialist in the field. Instead of the experience of one programmer you could hire, you gain access to the competence of the entire IT team. Most outsourcing companies employ only highly experienced specialists who have many certifications and industry training.
You Can Use Your Resources for the Right Purposes
Perhaps you have someone in the office who works in marketing but is also good at accounting. Even if the employee can perform many tasks, it causes loss of concentration on its core business and the person often performs tasks more slowly than a specially trained person.
You Don’t Have the Possibility of Hiring the Right People
On the other hand, you may not have people in the company who are able to perform specific tasks, and the employment of another person does not come into play. IT outsourcing is a perfect alternative then, and not just for a transition.
Take Advantage of Restructuring Gains
Business restructuring is a solution that often allows you to optimize costs, improve service or speed. In such situations, performing certain tasks can be withdrawn. In order to not give up the service, you can do it in an optimal way by outsourcing IT when our business is focused on key issues.
To keep up with the latest technology, companies are engaging a lot of time and money. Choosing an external IT provider that works with many clients obliges him to keep up with the latest industry trends. IT vendors, based on their expertise and experience, can choose the solutions that will work. Without such knowledge, it is easier to make mistakes and implement a solution that can cost us the whole company.
However, by delegating any task for your business, you convey responsibility. You are wondering whether you have chosen the right provider, whether this company will do the best that they can. Many business owners live in the belief that they will best execute their company orders and cannot divide their competencies.
According to Anotucci, any business owner deciding to outsource IT must be aware of the following risks:
Some IT Services are Difficult to Delegate using the Outsourcing Model
IT operation affects the entire organization. From simple tasks that are performed daily to complex aspects. Make sure your chosen IT provider is qualified to answer all your needs.
You can Lose Control
Critics of IT outsourcing believe that outsourcer will never be as effective as a full time employee. Many entrepreneurs are also concerned about confidentiality and data backup. To take a responsible approach to the issue, you will need a competent carer who will manage the IT staff in a competent way.
Employee Moral can Fall
In case you want to exchange full-time employees with external suppliers, the dismissal of some employees may adversely affect other people. Some of your employees may feel threatened by job loss.
If the vendor does not document your order or if you want to purchase your own software, you may not be able to change your decision. Many providers require you to sign an annual contract, which limits flexibility. How to avoid such a threat? Carefully select an IT service provider by checking its competence and asking the necessary questions.
Still do not know whether to opt for IT outsourcing? According to Anotucci, which in its article described the most common dangers, you can also expect many benefits if you outsource IT projects to your company:
Access to the Latest Technology
The technology industry is changing in the blink of an eye. How can one person be able to keep up with everything? Outsourcing gives the ability to have several IT professionals. If this is your key competence, get the knowledge you will profit from.
By deciding on outsourcing IT you will reduce costs (employing staff, purchasing hardware, software licenses). All liability will fall on your supplier.
High Staff Competence
An IT supplier in its own interest will find the best IT professionals to execute your projects. Without knowing it, you may have a problem hiring the right person yourself.
Your IT vendor usually employs a large number of specialists, so you can easily increase your resources.
If you are missing hand to work and your company has no opportunity to hire specialists, doing key duties falls on the incompetent person “Because someone has to do it.” Choosing outsourcing you can be sure that maintaining good relations with employees, because they can only do what they do best and what they were hired.
Now that you have thoroughly acquainted yourself with the advantages and disadvantages of IT outsourcing, you can consciously consider whether you decide to outsource IT, and maybe do internally IT-related tasks. One thing is certain, when deciding to manage the developers, IT professionals you have to learn to communicate with them – let’s face it: these are not the best co-workers in the world. Here are some tips on how to deal with them:
- Clearly and precisely communicate project goals.
- Show a strategic vision and a plan for your project.
- Choose the right contractor, based on his experience and references.
- Insist on signing a contract that includes all aspects, including financial.
- Cooperate with all of the people executing your tasks.