Exploring IT Outsourcing: Who Needs It and Why?

For any business, great IT talent is vital for keeping the wheels turning and avoiding costly downtime - but does that mean that you have to hire dedicated and expensive full time staff? Not necessarily. Outsourcing is the act of using an outside resource to complete a function for your business and can be a game changer for small businesses - 37% of which make outsourcing a key strategy within their operations.  And this figure can only rise.



While outsourcing is often considered to be something that only small or fledgling companies would need, the opposite is true. This approach can also help larger businesses by not only reducing costs but allowing them to cherry pick talent and optimize their operations.

Qualified and experienced IT staff command pretty hefty salaries these days and, during inevitable quiet times, retaining full time members of staff makes little economic sense.

In this article we’re discussing the reasons behind the rise and rise of outsourcing and exploring which businesses gain the most from software development outsourcing within modern business models.

Is Outsourcing Right For My Business?

IT outsourcing is very much an inclusive model that can benefit most types of business. Don’t believe us? Let’s take a look……..

Startups and SMEs

These types of businesses are usually all about scalability and growth - and they want it as quickly as possible. Because of this, a significant chunk of their budgets will be focused on all-important functions like software development, IT support and network security. As important as these things are, they can take time, effort and money away from more business-centric strategies, actions and goals.



For these businesses, outsourcing IT services not only allows them to focus on their products or services but also gives them access to the best IT talent and the latest technology while saving money which can be funneled into other parts of the organization.

Big companies with big IT bills

Big fancy companies tend to have big fancy IT departments; often with 10 or more employees. Let’s think about that for a minute - that’s ten big fancy salaries and 10 sets of paid annual leave. Studies show that during an eight hour working day, most employees are actively productive for just three or four hours - so that’s maybe four hours that you’re paying your IT staff to do nothing. On top of this, there are costs for equipment, software, infrastructure and recruitment - and suddenly your fancy IT department is looking pretty pricey.

Outsourcing is a great way for large companies to access IT professionals without all of the long-term costs associated with IT including updates, security and maintenance as well as personnel. This, of course, means more cash in the kitty for the things that make your business tick.

You just can’t get the staff

If your business is based in a big city, you may have access to the cream of the crop when it comes to IT staff. If, however, you’re in a smaller town, qualified software developers, cloud architects and cybersecurity professionals can be a little harder to come by - leading to a choice between unqualified staff or those demanding hefty salaries.

Outsourcing can help here by delivering cutting edge solutions and seasoned professionals. As well as being able to offer reasonable rates, outsourced employees don’t need to be based in your local area - meaning that your net is much wider in terms of talent.

Going global

For many companies, expanding into international territories is the holy grail and is, in some cases, essential for their survival. While going global is great, it’s also complicated and expensive with many technical and logistical pockets of turbulence. In order to become an international business, there’s a lot to consider including:

• Establishing secure and scalable systems at each location
• Navigating local cybersecurity guidelines
• Factoring in different data protection policies
• Getting to grips with international compliance codes

All of these things will quickly start to eat into your time and budget before you can even think about getting to work…..with your employees who only work eight hours a day.

Outsourcing can be a lifesaver here as it allows you to tap into a 24/7 team with oodles of talent and experience - including legal requirements in different jurisdictions - allowing you to complete your expansion quickly, easily and affordably.

Keeping cash flowing in the right direction

Every savvy business owner always has one eye on the bottom line and the simple fact is that an in-house IT team is not always the best investment. Salaries & benefits, training, equipment, software and upgrades are just the tip of the iceberg - and one which could sink your company.



Your outsourced company, on the other hand, operates at scale which means that you’re receiving the same (if not better) performance that you would from a bums-on-seats team but the cost is shared by multiple clients.

Outsourcing will also protect you from overinvestment and unexpected expenses as your service scalability will only cost you what you are actually using - making it easier for your business to budget long term.

Expertise and the next big thing

The thing about IT is that it never stands still for long. Technology advances in leaps and bounds, bringing with it the constant need for new skills and experience. This can mean that, in a very short time, the team that you spent so much time and money on recruiting may no longer be fit for purpose. For example, five years ago there’s a good chance that you had no need for an AI developer or a cloud designer but now these may be essential to your business.

The good news is that when you outsource your IT, you don’t have to worry about hiring new staff or retraining existing ones as your outsourced team will not only have this covered but will also be bang up to date on cybersecurity mandates and regulatory and compliance requirements - giving you complete peace of mind as well as top shelf expertise.

Fast and flexible growth

When you want to scale your business - and you want to do it fast - your IT team might actually be more of a hindrance than a help. Upskilling staff or hiring new ones can be a slow and expensive process and can mean missed opportunities. Not so with an outsourced team who will be ready to hit the ground running to support your changing business needs and get you where you need to go without massive expense.

Up and running in no time

If you’ve got a great idea, you’ll want your business up and running as fast as possible in order to secure competitive positioning - and that’s not going to happen if you first have to build and pay for your dream IT team. IT outsourcing is ideal for startups as it provides a ready built IT department who can get to work immediately to help you get to market faster through efficient, automated and optimised processes. For you, this means more time to focus on your innovation rather than the technical nuts and bolts.

What Can - And Should - Be Outsourced?

Software development

One of the most commonly outsourced activities is that of software development - and for good reason. A professional and experienced team is able to develop, test and deploy your app in the time that it would take you to hire the right staff. These third party teams are well versed in creating templates to expedite cycles as well as deploying bullet proof quality control and testing, ensuring that your product is free of issues and ready to go in record time.

IT support and maintenance

It’s a fact of life that IT problems will - and do - occur and if your in-house team is spreading themselves too thin this can lead to disruptions and problems for your business. Downtime is the enemy of any organisation and so proactive maintenance and trouble-shooting is vital. An outsourced team can tackle numerous IT issues at once including helpdesk assistance to ensure that employees are able to continue doing their jobs.

Real time analytics and efficient remote monitoring means less interruptions, better maintenance and 24/7 assistance to increase operational stability and, just as importantly, increase customer satisfaction.

Cybersecurity services

I’m sure we don’t need to tell you how important cybersecurity is for your business. Since the COVID-19 pandemic, cyberattacks, breaches and threats have increased exponentially and these can be devastating to an organization. Without strict security measures and threat detection and prevention your company is, essentially, defenseless.

Outsourced cybersecurity can protect your digital assets through layers of protection including monitoring, detection, firewalls and data encryption - all conducted with adherence to regulations ensuring rock-solid compliance.

What Can Go Wrong - And How To Deal With It

So, outsourcing sounds pretty great, right ? Absolutely but, before you go ahead and sign on the dotted line there are a few things you need to think about.

1. Vendor reliability

Picture the scene - your shiny new service provider has promised you the world but once you’re onboard, cracks begin to show. Over-promising and under delivering is unfortunately not uncommon - particularly with new vendors who are focusing on acquiring clients. This can leave you stuck with a company that lacks the know-how for complex projects or simply fails to deliver consistent quality.

Before committing to a vendor, it’s important to do your research - including case studies and previous project outcomes and to delve deep into client reviews and feedback. Where possible, it’s also a good idea to request a trial project with a vendor first to allow you to evaluate quality before entering into a contract.

2. When you’re not on the same page - or in the same time zone

OK, so that overseas outsourcing company looks great on paper with low rates and uber-talented professionals - what could possibly go wrong? Unfortunately, overseas businesses can be fraught with issues such as time zone delays, language and linguistic discrepancies and different work ethics. These things can quickly lead to frustration and a lack of efficiency in services.

Using an overseas provider can work well but you will need to make sure that some things are put in place including:

• Established and structured communication channels
• Aligned or overlapping working hours
• Multilingual documentation
• A dedicated English speaking project manager
• Defined escalation protocols
• Real time transparency

3. Compliance issues

Compliance and regulations can differ widely between different territories and breaches such as data protection non-compliance, financial disclosure issues and industry-specific breaches can soon land your company in hot water.

To avoid this, it's important to insist on evidence of regulatory expertise as well as listing compliance responsibilities in your contract. You should also conduct independent monitoring and legal reviews to ensure that compliance is ongoing and accurate.

4. When the fine print costs a bundle

Hidden costs can quickly make a good deal go bad - and if you’re under contract, there may be little that you can do about them. Vague service-level agreements (SLAs) and a lack of transparency on maintenance fees can quickly send your bills skyrocketing - and bring your new deal down to Earth with a bump.

Open cost structures with listed extras such as scalability options and support should always be put in place right from the start to help you to avoid any nasty surprises. Additionally, always make sure that you check invoices properly and renegotiate contracts on a regular basis to ensure that your good deal stays that way.

Conclusion

Put simply, outsourcing your software development makes good economic sense in giving you more techy oomph for less cash. To make this work for you, get your partnership off on the right foot by properly researching vendors and, once chosen, setting real parameters and guidelines to make sure that everybody stays on the same page.

When done right, this will provide you with an incredible IT resource partner at a much lower cost than hiring - and managing your own in-house team.