More and more businesses are turning to outsourcing IT services. They are doing this for cost savings, access to specialized talent, and the ability to stay competitive in a constantly changing digital landscape. But before you make the decision to outsource IT services, it’s important to understand the advantages and risks associated with this option. In this article, I’ll provide you with the best advice on the advantages and disadvantages of outsourcing IT services.

Outsource If It Is Not What You Do Best.

Peter Drucker has the best answer about outsourcing, “Do what you do best and outsource the rest”. This also applies to information technology functions in your company. Specifically, IT functions can involve a wide range of operations, from the entirety of the IT function to discrete, easily defined components, such as disaster recovery, network services, software development, or IT help desk.

There are many advantages and few risks to outsourcing a lot of your IT functions. At the same time, you do need to evaluate which IT function to outsource. This could be because of costs, but more importantly it could be because certain of your IT functions may actually offer a competitive edge. Otherwise, look to build a business justification based on the advantages and risks that IT outsourcing can bring to your company.

Some Statistics About Outsourcing IT Services

The best reason to outsource your IT is that a 3rd party technology company can do it better and cheaper than your in-house staff. To explain, Electric, an IT services company, has some fairly compelling reasons why a Small And Midsize Business (SMB) should outsource all or some of your IT functions. Also, I think that these same reasons can apply to large businesses as well for at least some of their IT functions. To illustrate, see reasons below why some businesses are thinking to outsource their IT.

• 53% of SMB owners feel less competitive than larger businesses due to IT costs.
• 43% of cyber attacks target small businesses, but only 14% are prepared to tackle them.
• IT downtime can cost up to thousands or even hundreds of thousands of dollars per hour depending on the size of your business.
• 59% of small business leaders find it hard to introduce new technologies.

See the following sections on the advantages and risks of outsourcing your IT functions.

9 Advantages of Outsourcing IT Services

1. Control IT Cost, Cost Savings and Reduced Overhead. 

One of the primary advantages of outsourcing IT services is the cost savings that it offers. Specifically, companies can reduce their IT costs by outsourcing IT services, as they don’t need to pay for the salaries of an in-house IT staff. Further they don’t need to pay for the hardware and software associated with running IT operations. Additionally, outsourcing IT services can also reduce indirect overhead costs. This is because companies don’t need to pay for the space, electricity, and other costs associated with running an internal IT department.

2. Increased Efficiency, Productivity, and Competitiveness.

Outsourcing IT services can also help companies increase efficiency, productivity, and competitiveness. For example, companies can benefit from the expertise and experience of an outsourcing provider. This is because they will have access to the latest technology and can quickly and easily implement new solutions. More importantly, this can help companies stay ahead of their competitors and increase their overall productivity.

3. Trained, Experienced, Qualified, Certified.

Outsourcing IT services also ensures that companies are working with professionals who are trained, experienced, qualified, and certified. Moreover, this ensures that the company is working with the best people for the job and that they are getting the highest quality service.

4. Improved Customer Service.

Outsourcing IT services can also help companies improve customer service. By outsourcing IT services, companies can ensure that they are providing their customers with the best possible service and that any IT-related issues are quickly and efficiently dealt with.

5. Increased Security and Compliance.

Outsourcing IT services can also help companies increase security and compliance. By outsourcing IT services, companies can ensure that their data and systems are secure and compliant with industry regulations. More importantly, this helps companies protect their data and systems from malicious attacks.

6. Scalability And Able To Implement Immediately.

Outsourcing IT services can also help companies quickly and easily scale up or down as needed. Hence, this makes it easier for companies to respond to changes in demand and implement new solutions as needed.

7. Reduce Risk and Better Quality Control.

Risk Mitigation For Supply Chains: How To Best Identify, Make Assessment, Overcome

Outsourcing IT services can also help companies reduce risk and improve quality control. By outsourcing IT services, companies can ensure that their IT systems are running smoothly and that any problems are quickly and efficiently dealt with. Moreover, this helps reduce the risk of data breaches and other security issues.

8. Increased Focus on Core Business.

Outsourcing IT services can also help companies focus on their core business. By outsourcing IT services, companies can focus on the areas that they are best at, while leaving the IT services to the experts. Indeed, this can help companies free up resources and focus on the areas where they can be most successful.

9. Quickly Implement Latest Technology.

Finally, outsourcing IT services can help companies quickly and easily implement the latest technology. By outsourcing IT services, companies can access the latest technology and quickly and easily implement new solutions. Absolutely, this can help companies stay ahead of their competitors and ensure that they are using the latest technology.

Managed IT Services – SMB / SME Advice On The Best Ways To Outsource

5 Risks of Outsourcing IT Services

1. Loss of In-House Knowledge and Control. 

When outsourcing IT services, there is the risk of losing the in-house knowledge and control of the processes and systems. So outsourcing IT services to a third-party vendor may mean that the organization is no longer in control of the day-to-day operations and processes. This in turn could lead to a lack of understanding and oversight of the IT services.

2. Security Risks.

Security is always a concern when it comes to outsourcing IT services. Indeed with third-party vendors, it is not guaranteed that they have the best security protocols in place. Thus, this could potentially expose your organization to major security risks such as loss of sensitive data or ransomware. So it is important that your business takes the necessary steps to ensure that the third-party vendor has adequate security measures in place. For more information on Data sensitivity, see my article, Data Sensitivity: What You Need to Know For Your Business.

OnShoring In The U.S. – Best Opportunities, Risky Pitfalls, Trends

3. Communication and Cultural Challenges. 

When outsourcing IT services, there can be communication and cultural challenges that arise. For instance, different countries and cultures may have different approaches to IT services. Also, communication can be difficult due to language, time zone, and other factors.

So it is important that your business understands the cultural differences when outsourcing IT services. Indeed, communications and culture challenges are a major consideration with offshoring IT services. For a more detailed discussion on offshoring versus onshoring, see my article, OnShoring In The U.S. – Best Opportunities, Risky Pitfalls, Trends.

4. Limited Flexibility and Responsiveness.

When outsourcing IT services, there is a risk of limited flexibility and responsiveness. In some cases, third-party vendors may not be able to provide the same level of responsiveness and support as an in-house team, which can lead to delays in resolving issues.

5. Cost Overruns.

Outsourcing IT services can lead to cost overruns if your business is not careful. It is important that you have a clear understanding of the costs associated with outsourcing IT services and ensure that your business is not spending more than it can afford. Also, it is important to ensure that your business is getting the best value for its money. Indeed, it is key that you have both have in place a good outsourcing contract with service level agreement (SLA) and a supplier management program in place. See my article, Supplier Management: Optimize, Make Compliant, Assure Quality, Mitigate Where Risky, for more details.

For more information on the advantages and risks of outsourcing your IT functions, see Essents’ The Top 10 Benefits Of Outsourcing IT Through Managed Services, and Neweratech’s Outsourced IT Services. Also for more managing risks, see my article, Risk Mitigation For Supply Chains: How To Best Identify, Make Assessment, Overcome.

Offshore Vs Nearshore Outsourcing: 11 Practical Decision Factors That Will Help You Make The Best Decision

For more insights from SC Tech Insights, see the latest articles on Outsourcing and Information Technology.