About IT Outsourcing: Reasons, Risks, Rewards! In this article, we’ll discuss about Outsourcing: the Reasons, Risks, Rewards, specifically as they relate to Information Technology (IT). And then, we’ll provide some tips to help you manage successful relationships with your IT service providers (whether they are full-time staff, or outsourced).
The Reasons to IT Outsourcing:
There are many reasons why companies outsource. Here are some of the Top Reasons:
Reduce and control operating costs:
When you outsource, you eliminate the costs associated with hiring an employee, such as management oversight, training, health insurance, employment taxes, retirement plans etc.
Improve company focus:
It is neither practical, nor possible to be a jack of all trades. Outsourcing lets you focus on your core competencies while another company focuses on theirs.
Gain access to exceptional capabilities:
Your return on investment is so much greater when you outsource information technology to a firm that specializes in the areas you need. Instead of just the knowledge of one person, you benefit from the collective experience of a team of IT professionals. Outsourced IT companies usually require their IT staff to have proper industry training and certifications as well.
Free internal resources for other purposes:
You may have someone in your office that is pretty good with computers or accounting, but most likely these were not the jobs he or she was hired to do. If they are spending time taking care of these things, who is doing what they were hired to do? Outsourcing allows you to retain employees for their highest and best use, rather than wasting their time on things that may take them longer than someone who is trained in these specific areas.
Resources are not available internally:
On the flip side, maybe you don’t have anyone in your company who can manage your IT needs, and hiring a new employee is not in the budget. Outsourcing can be a feasible alternative, both for the interim and for the long-term.
Maximize restructuring benefits:
When you are restructuring your company to improve costs, quality, service, or speed, your non-core business functions may get pushed aside. They still need to be handled, however, and outsourcing is an optimal way to do this. Don’t sabotage your restructuring efforts by failing to keep up with non-core needs.
Function difficult to manage or out of control:
This is definitely a scenario when outsourcing to experts can make a big difference. But don’t make the mistake of thinking you can forget about the problem now that it’s being “handled.” You still need to be involved even after control is regained.
Make capital funds available:
By outsourcing non-core business functions, you can spend your capital funds on items that are directly related to your product or your customers.
Keeping up with technology required to run your business is expensive and time consuming. Because professional outsourced IT providers work with multiple clients and need to keep up on industry best practices, they typically know what is right and what is not. This kind of knowledge and experience dramatically reduces your risk of implementing a costly wrong decision.
The IT Outsourcing Risks:
Anytime you give someone else responsibility for an aspect of your business, whether a full-time new hire or an outside vendor, there is risk involved. According to Yvonne Lederer Anotucci in her article “The Pros and Cons of IT Outsourcing” business owners who consider outsourcing IT functions need to be aware of the following risks:
Some IT functions are not easily outsourced:
IT affects an entire organization; from the simple tasks employees do everyday to the complex automated aspects. Be sure the outside vendor are qualified to take care of your greatest needs.
Control may be lost:
Critics argue that an outside vendor will never be as effective as a full-time employee who is under the same management as other employees. Other concerns include confidentiality of data and disaster recovery. However, a supervisor that is knowledgeable in managing an IT staff member will usually be required.
Employee morale may be affected:
This is particularly true if you will be laying off employees to replace their job functions with an outsourced firm. Other employees may wonder if their job is at risk, too.
You may get “locked in”:
If the vendor does not document their work on your network and system, or if you’ve had to purchase their proprietary software, you may feel like you can’t go anywhere else or take back your network. Many outsourced companies require you to sign a year to year contract which limits flexibility.
Most of these risks can be avoided altogether if you know what to look for in a vendor and ask the right questions. Contact with Appoint (http://appoint.com.sg/contact-us) or our chatbox that be advised to limit your risks.
The Rewards of IT Outsourcing:
There are many rewards you can expect when you outsource your company’s IT functions as well:
Access to the latest and greatest in technology.
High quality of staff.
Job security and burnout reduction for regular employees.
Now that you have seen the risks and rewards associated with outsourcing the IT function of your business, there is a lot to think about. Whether you choose to outsource or hire internally, one thing is certain, you must know how to manage successful working relationships with your IT service providers. Here are some tips:
- Clearly form and communicate the goals and objectives of your project or business relationship.
- Have a strategic vision and plan for your project or relationship.
- Select the right vendor or new hire through research and references.
- Insist on a contract or plan that includes all the expectations of the relationship, especially the financial aspect.
- Keep open communication with all affected individuals/groups.
- Rally support and involvement from decision makers involved.