Introduction to IT Outsourcing
For very many years now, companies have been outsourcing labor, services, and products to meet their demand or the demand of their clients. Outsourcing is when a company gets into an agreement with a third-party company or hires another company that offers specific experts services that are required by the outsourcing company. This does not necessarily mean that the outsourcing company does not have the resources to handle the job at hand. There are various reasons why companies prefer outsourcing other than delegating duties internally. Sometimes, outsourcing may require the transfer of employees from one company to the other.
“The important thing about outsourcing or global sourcing is that it becomes a very powerful tool to leverage talent, improve productivity and reduce work cycles.” – Azim Premji, Chairman of Wipro Limited.
Why is Outsourcing Needed?
Companies are known to outsource services as they are very technical and vital services that need the skills and expertise offered by distinguished service providers.
Can we Outsource an IT Function?
Yes, you can outsource an IT function. IT Outsourcing entails contracting or hiring an IT service provider to handle information technology functions. Software development and management are some of the IT functions that most companies outsource but there are many more IT functions that brands contract.
How Does IT Outsourcing Work?
IT Outsourcing is an official agreement just like any other deal between companies which means there is documentation of the contract and the document is binding. The third-party company is expected to perform specific tasks, handle the operations and offer the required services as documented in the agreement or contract.
Which is the Best Example of Outsourcing?
Software development is the best example of IT Outsourcing and it includes website development, application development, and software management. Before any company successfully outsources IT responsibilities, it is important to focus on the partnership as much as the deal itself.
How Does IT Outsourcing Work?
IT services may and do vary between one service provider to another. The types of IT Outsourcing available are dependent on the services required, the cost, and the location of the third-party company offering the specialized IT services. There are three types of outsourcing in IT and they include:
Offshore IT Outsourcing
As the name suggests, offshore outsourcing means that the third-party IT service provider is based overseas. This means that the service provider works remotely and is in a politically stable and resourceful country. With this type of outsourcing, the business saves on tax and also from low running costs. Wages are generally low in countries that provide for offshore service outsourcing, which makes it cheaper for the business and good support for growth.
In nearshore outsourcing, the service provider is within your geographical location, or in a nearby country. With this type of IT Outsourcing, there may also be some form of tax savings as well. A great advantage of nearshore outsourcing is there is minimal or no difference in time zones, make it easy to have real-time support whenever needed. There are also reduced cultural and language barriers compared to offshore outsourcing.
Onshore outsourcing utilizes local IT service providers, i.e., companies within the same country. Onshore outsourcing is relatively expensive compared to offshore and nearshore outsourcing but has got a couple of benefits as well. To begin with, there is zero language barrier, no time difference, and the third-party company provides comprehensive real-time support as you can easily access their services.
What are the Reasons for Outsourcing?
There are plentiful reasons for outsourcing IT services. Organizations and businesses choose the outsourcing option for convenience and flexibility especially when it comes to software development which is a technical and complex task. Let’s check out the reasons for outsourcing.
Reduce the Cost of Operation
The major reason for IT Outsourcing is to save money. Businesses look to maximize profits and the best way to do this is to minimize operational costs. For example, when a business is looking to develop and launch a website or application, they outsource these services as it is cheaper compared to paying for training for one or several employees to do the development and management of the software.
Improve Efficiency and Productivity
Most companies or businesses have a workforce just enough to deliver their services to clients. This means, redirecting some employees to work on the IT project has a huge impact on productivity and efficiency. Businesses find it wise to outsource services while keeping their workforce intact. For example, a laptop manufacturer may find it cheaper and more efficient to outsource the manufacture of electronic parts rather than attempting to manufacture them in-house.
Lower Business Risk
There are lots of risks involved in running a business or an organization. Companies at times find it less risky to outsource some of the functions. For example, it is less risky for a company looking to develop specific software to outsource this function rather than trying to attempt and fail. It’s best to wiser to outsource this function to a renowned IT service provider for better and faster results.
Meet Compliance Requirements
All businesses need to meet the set compliance requirements with all their products and services. There is a high risk of producing or offering sub-standard services if a company attempts to work on something they have zero or limited expertise on. For this reason, companies and organizations outsource product or service providers, especially in IT to handle these functions and deliver quality that meets compliance requirements.
Reduced Wage Requirement
Most if not all IT Outsourcing companies and third-party services providers offer their services at a cheaper cost than going for in-house service. Outsourcing IT functions saves the company the need to permanently hire personnel to handle the same function at a higher cost.
A lot of time is lost as well as resources trying to train employees to carry out certain duties rather than outsourcing experts for the job. Businesses prefer outsourcing tasks that cannot be handled in-house to save on time especially if the results or outputs are required soonest possible.
When a company or business is looking to rebrand or restructure, it is wiser to outsource some functions such as IT rather than hiring more experts to fill up the existing positions temporarily. Outsourcing during company or organization restructure makes it easier to gain ground as a reborn brand before finding the perfect candidates to fill up the positions permanently.
What are the Benefits of IT Outsourcing?
Over the years, corporates and organizations have discovered the amazing benefits of IT Outsourcing which is a great way to outnumber the demerits. Here are the benefits of Outsourcing.
Easy to Find the Right Experts
Although you might have a team of very talented employees, no one can be an expert or good at everything. Now more than ever, companies are looking to incorporate more IT features into their operations to improve service delivery. An amazing thing about IT Outsourcing is that there are very many IT service providers available in the market ready for contracting. It is easy to find a renowned company to delegate the IT tasks at hand.
Depending on what products or services a company provides, outsourcing any form of tasks including IT tasks greatly improves efficiency. Delegating IT projects to already existing staff adds to the work to be done which eventually results in reduced productivity. Having an IT service provider focusing solely on the outsourced task greatly improves productivity and efficiency which is a vital goal for all businesses.
In-house management of IT tasks or the development of software is very costly compared to outsourcing these services. This is so because in-house management or development may require additional training of existing employees. At the same time, permanently hiring an IT expert to handle one IT task will cost more especially if there is no constant need for these services. IT Outsourcing goes a long way in saving money and maximizing profits for companies.
As mentioned before, software development is a major task or project that companies outsource. Having a third-party IT service provider working on the software allows for faster development since they focus solely on this task at hand. Delegating additional duties among the existing staff only slows down the process.
Top Tier Product
One of the prime reasons for IT Outsourcing is to get ensure services or products that meet compliance requirements. IT functions are technical and complicated and require the attention of an experienced IT expert or IT team. When outsourcing these services, a company can come up with quality products or services that meet compliance requirements.
When outsourcing IT tasks or any other task in a company, there is a signed agreement between the two parties involved. These documents are binding which means the contracted company is fully responsible for any development that arises concerning the task at hand. This way, businesses do not have to worry about meeting deadlines or meeting the needs of clients as the contracted company has full accountability.
Why is Outsourcing Bad?
Although IT Outsourcing is associated with very many advantages, not all businesses get to benefit from it. Before outsourcing any functions, companies need to look into all possible outcomes and weigh the merits against the demerits. Let’s look into the disadvantages of IT Outsourcing.
For offshore and nearshore IT Outsourcing to work efficiently, the outsourcing company may be forced to share very vital operational and commercial information with the third-party IT service provider. Currently, the digital world is very insecure as anybody with the right skills and access to confidential information can use the two to their benefit. Several companies have suffered huge losses as a result of poor data protection while outsourcing services for IT service providers.
As much as Outsourcing IT services saves on costs, at times, you may not be sure of how much it will cost you. As the third-party company handles the task delegated to them, some requirements may change or the team may face additional obstacles during the process requiring additional funds to streamline everything.
There is a high probability of losing management control of the business IT functions and workflow while working with IT service vendors or freelancers since the monitoring and management tools are fewer. As a company, you do not have control of the outsourced IT task but rely on the IT service provider for updates on the progress.
Improved quality is one of the advantages of outsourcing services but only if you get an industrious and skilled freelancer or IT service vendor. With the limited control of the already outsourced functions, companies are reduced to having to wait for the end product to judge on quality. This means a company can spend on IT outsourcing and still get sub-standard quality work. Companies that suffer quality drawbacks are those with no expertise in IT and cannot evaluate the progress or the result.
How Does Google Use Outsourcing?
Google like other tech Moguls has been outsourcing a great amount of IT-related work to renowned companies such as Wipro and Infosys for a while now. Google uses outsourcing for advertising purposes including email and phone support. With these outsourcing moves, Google has built a strong and reliable customer support system.
Why Choose Sonatafy?
IT Outsourcing is not complicated but the end product is of paramount importance. As much as the market is flooded with IT service vendors, not all of them have got what it takes to deliver services to and beyond expectations. Sonatafy is an elite IT service provider offering a wide range of services to hundreds of clients. Here is why you should choose Sonatafy.
Everyone deserves value for their money and Sonatafy is more than willing and capable to deliver. What matters most in IT Outsourcing is the quality of output and at Sonatafy, we can guarantee quality for whatever IT task you delegate to us.
Top IT service vendors pride themselves on meeting clients’ needs and expectations and at Sonatafy, we are known best for that. Our reputation precedes us and there is no reason you should not be on the list of the hundreds of clients giving positive reviews.
Operation costs reduction is a major reason for IT Outsourcing, but only one IT services provider can be trusted to provide for this. We have a bespoke pricing criterion to cater to the financial abilities of all clients. With these reduced charges, your operational costs will immensely reduce while the output increases.
Performance and client satisfaction are major driving forces at Sonatafy. To achieve this, we ensure that we hire the best of the best in the industry and maintain an unending culture of industriousness. This way, you are sure the output you get is a product of teamwork, industriousness, and undoubted expertise. We are great advocates of software development teams for optimum efficacy.
In the words of – Ryan Khan, Founder of The Hired Group, “Master your strengths, outsource your weaknesses.” You can rely on us, Sonatafy Technology, to turn your weakness into strength. Give us a call today.