Outsourcing IT services has been a staple of the tech world for decades- and this trend shows no signs of stopping. Companies are racing to replace outdated technology to satisfy a discerning customer base. Businesses that are not on the bleeding edge of tech risk falling behind. According to a spiceworks report, 44% of businesses plan to increase their tech spending in 2020- compared to 38% in 2019. Almost all IT activities can be outsourced. From data center activities, software development and e-commerce to helpdesk support, disaster recovery, network operations and more.
IT outsourcing lets business owners and managers focus on big picture issues by giving them the flexibility to hire specialists as needed. Outsourcing is also a cost-effective strategy for expanding to new markets and countries. When done right, outsourcing can be an effective and lucrative way to stay ahead of the tech curve. On the other hand, a bad choice of outsourcing partner can be more trouble than it is worth. Here are the whys, whens and hows of successful outsourcing.
Why Outsource?
Before getting into the when and how of IT outsourcing, it is important to know why you should consider this approach in the first place. Software and hardware are evolving at breakneck speeds, and tech quickly becomes outdated and obsolete. Keeping up with industry changes is a daunting task, even more so if you do not have a lot of manpower or technical expertise. Outsourcing gives you access to the skills, experience, and know-how of a development team that is up to date with the latest technologies. This frees your team up to focus on other vital business activities.
That being said, outsourcing can lead to less control over the project, which can be a challenge. Besides, there is always the threat of hidden costs when working with outsourced companies. This is why you should be careful not to underestimate setup costs. These include redeployment and relocation costs as well as running and handoff costs. There is even a potential for a culture clash between the client and service provider, so careful partner selection is a must.
When to Outsource
Before you even consider outsourcing, you need to make sure that the existing processes in your company are well documented, unambiguous and streamlined. Handing over an unorganized project will lead to exponentially more problems down the line. If the most skilled developers in your company do not have enough time to work on critical projects and features, it might be time to outsource. Delegating smaller day-to-day tasks to a third party will free them up to work on more impactful tasks. Outsourcing back-end operations, for example, can allow your dev team to focus on developing and improving your core product.
Another situation where outsourcing is a valid option is when you have too much on your plate. The right outsourcing partner will lighten the workload and save you the time and energy needed to interview and vet a whole new team of full-time employees. The most common reason for reaching out to an external IT partner is not having adequate in-house expertise. Add to this a tight deadline, and involving external talent quickly becomes a step in the right direction. Using the services of an experienced outsourced team can significantly cut down both your overhead and time to market.
Knowing when not to outsource is equally important. You should avoid outsourcing if there is a threat to confidentiality or security. If you work with medical records or any other personal or sensitive information, there is always a risk of confidentiality being compromised. This will take a huge bite out of both your bottom line and your reputation. The risk is even higher if you are sharing proprietary company information. If you have no choice but to outsource sensitive tasks, make sure to diligently assess the credentials of the outsourcing enterprise. Incorporating a penalty clause in your contract will help cover the costs of any potential incidents.
How to Outsource
Even if your need for outsourced help is high, working with the wrong people can set you back. Your potential IT provider will be responsible for maintaining and updating your IT infrastructure. Make sure to opt for a managed service provider who offers the most up to date technologies, certifications, and services. A Service Level Agreement (SLA) is the most crucial document when it comes to outsourcing. A well written SLA will save you a lot of headaches down the road, so ensure that every detail is written clearly and that there is no room for ambiguity. To that point, it is always recommended to hire a business lawyer to make sure your best interests are being accounted for and represented.
Writing up the scope of work you wish to outsource is an important first step. Key Performance Indicators (KPIs) are an integral part of this brief. They will be used to measure the outcome and impact of your outsourced activities. They also define your expectations, requirements, deliverables and goals. There are various other expectations that you need to review and define. Response times, required attention to detail or compliance to certain regulatory standards, to name just a few.
There are countless outsourcing companies to choose from, so focused research is necessary for finding the right partner. It is no secret that websites and reviews can be deceptive, or even forged. Reaching out to your network for recommendations is always a smart move. Once you narrow down your potential partners, take the time to get in touch with them. Ask for references from prior clients in your specific industry.
Reaching out to each reference and asking detailed questions will help you understand how the external team operates. It will also let you know if you can expect quality work on time. Try not to focus exclusively on technical deliverables. Ask about their communication and reporting system. Whichever company you choose, you will need to interact with them regularly. It helps if this communication is effective and streamlined, and if your external partner can guarantee quick response times and a high standard of communication.
